ZG Should I Buy
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Zillow Group Inc (ZG) is not a strong buy at this time for a beginner investor with a long-term focus. The stock is currently oversold, as indicated by the RSI, but the broader technical indicators remain bearish. Despite positive revenue growth and strong rental demand, the stock faces significant headwinds from legal expenses and declining profitability. Analysts have lowered price targets, and insider selling has surged, signaling caution. Given the lack of strong proprietary trading signals and the investor's preference for long-term stability, it is better to hold off on buying at this time.
The technical indicators for ZG are bearish. The MACD histogram is -1.854, below 0, and negatively expanding, indicating downward momentum. RSI_6 is at 7.519, signaling an oversold condition, but the moving averages (SMA_200 > SMA_20 > SMA_5) confirm a bearish trend. The stock is trading below key support levels, with S1 at 44.704 and S2 at 39.766, suggesting further downside risk.
Revenue increased by 18.05% YoY in Q4 2025, driven by strong rental demand.
Analysts acknowledge operational progress and improving 'For Sale' trends.
Legal expenses are weighing on EBITDA, impacting profitability and investor confidence.
Insider selling has surged by 1546.66% over the last month.
Analysts have broadly lowered price targets, citing challenges in the housing market and legal overhangs.
Stock dropped 17% recently due to concerns over future earnings.
In Q4 2025, revenue increased to $654 million, up 18.05% YoY. However, net income dropped to $3 million (-105.77% YoY), and EPS fell to $0.01 (-104.55% YoY). Gross margin also declined to 72.78%, down 4.00% YoY. While revenue growth is strong, profitability metrics have significantly deteriorated.
Analyst sentiment is mixed but leaning cautious. Several firms, including Citi, DA Davidson, and UBS, maintain Buy ratings but have lowered price targets significantly. Other firms, such as Susquehanna, Cantor Fitzgerald, and Goldman Sachs, maintain Neutral ratings, citing legal expenses and a challenging housing market as key concerns.
