Zillow (ZG) Valuation Revisited After Google Tests Home For‑Sale Ads in Search Results

Investors in Zillow Group (ZG) are reassessing the story after Alphabet Google began testing home for-sale ads at the top of search results, a shift that directly challenges Zillow’s prime position in online home discovery.

See our latest analysis for Zillow Group.

The Google test hit sentiment hard in the short term, with a sharp drop earlier in the week and a recent 90 day share price return of negative 14.95 percent. However, Zillow still boasts a strong three year total shareholder return of 116.19 percent that suggests longer term momentum is intact.

If this shake up has you rethinking how you spread your bets across digital platforms, it might be worth scanning fast growing stocks with high insider ownership for other fast moving names with committed insiders.

With shares still trading below analyst targets despite double digit revenue growth, the key question now is whether Zillow is quietly undervalued after the Google scare or if the market is already pricing in every ounce of future growth.

Most Popular Narrative: 18.2% Undervalued

With Zillow Group last closing at $72.38 against a popular fair value estimate of $88.46, the narrative frames today’s pullback as an opportunity, not a trend break.

The shift toward integrated, end to end digital transaction ecosystems (like Zillow 360 and Enhanced Markets) is enabling Zillow to capture more ancillary services revenue (mortgages, rentals, software), reducing dependence on advertising and expanding top line growth as well as supporting EBITDA margin expansion through operational efficiencies.

Read the complete narrative.

Want to see what powers that confidence? This narrative leans on accelerating revenue, widening margins, and a future earnings multiple more typical of high growth software leaders. Curious which bold assumptions sit under the hood of that valuation roadmap and how far profitability is expected to stretch beyond today’s losses? The full story shows exactly how those moving parts stack up into that mid double digit upside.

Result: Fair Value of $88.46 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, stubbornly weak housing affordability or tougher commission regulations could undercut transaction volumes and agent ad spend, which could stall Zillow’s high growth roadmap.

Find out about the key risks to this Zillow Group narrative.

Another View on Valuation

Our SWS DCF model also flags upside, putting fair value around $101.74, roughly 28.9 percent above the current $72.38 share price. If both narrative and cash flow math agree the stock is undervalued, are investors overreacting to near term noise or underestimating long term execution risk?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own Zillow Group Narrative

If this perspective does not quite match your own, dive into the numbers yourself and craft a fresh narrative in minutes, Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Zillow Group.

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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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