How Investors May Respond To Zillow Group (ZG) Turning a Profit and Unveiling New AI-Powered Tools

• Zillow Group recently reported improved third-quarter results, including a shift to net income of US$10 million and year-over-year revenue increases, while reaffirming its fourth quarter and full-year 2025 revenue guidance and unveiling new features in its mobile app.
• An interesting insight is that alongside financial growth, the company continues to invest in technology with new tools like AI-powered virtual staging and integrated messaging, aiming to enhance the home shopping experience and user retention.
• We'll examine how sustained product innovation, such as Zillow’s recent integrated messaging feature, may reshape the company’s investment narrative.

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Zillow Group Investment Narrative Recap

To own Zillow Group stock, you'd need to believe that technology-driven enhancements will keep driving user growth and deeper engagement, building shareholder value even as macro and regulatory headwinds weigh on real estate volumes and agent revenues. The latest third-quarter earnings showed a return to profitability and strong revenue momentum, but these announcements do not materially change the core catalyst: Zillow’s ability to translate product innovation into sustained transaction and ancillary service revenue growth remains pivotal, while continued legal and regulatory risks are the largest immediate threat to its outlook.

Among Zillow’s recent updates, the introduction of a robust in-app messaging feature stands out for its relevance. By streamlining the communications and decision-making process for homebuyers and co-shoppers, this enhancement aligns closely with Zillow’s goal to improve conversion rates and grow monetizable transactions, critical to the short-term growth story given the challenging transaction environment.

On the other hand, investors should be aware that ongoing regulatory and legal actions could...

Read the full narrative on Zillow Group (it's free!)

Zillow Group's outlook anticipates $3.6 billion in revenue and $415.2 million in earnings by 2028. This requires a 14.8% annual revenue growth rate and a $477.2 million increase in earnings from the current level of -$62.0 million.

Uncover how Zillow Group's forecasts yield a $88.46 fair value, a 25% upside to its current price.

Exploring Other Perspectives

The Simply Wall St Community produced seven fair value forecasts for Zillow Group ranging from US$28.38 to US$103.28 per share. With such differing views, keep in mind that regulatory and legal developments may impact future revenues and create further divergence in performance expectations.

Explore 7 other fair value estimates on Zillow Group - why the stock might be worth less than half the current price!

Build Your Own Zillow Group Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Zillow Group research is our analysis highlighting 3 key rewards that could impact your investment decision.
• Our free Zillow Group research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Zillow Group's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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