Z Should I Buy
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Zillow Group Inc (Z) is not a strong buy for a beginner, long-term investor at this time. While the company has shown revenue growth, its declining profitability, bearish technical indicators, insider selling, and legal uncertainties make it a less favorable option. The lack of strong trading signals and mixed analyst sentiment further support a hold recommendation.
The stock is currently in a bearish trend. The MACD is negative and expanding downward (-1.868), the RSI is extremely oversold at 8.16, and the moving averages are bearish (SMA_200 > SMA_20 > SMA_5). The stock is trading below key support levels, with S1 at 44.908 and S2 at 39.775, indicating further downside risk.
The company reported an 18% YoY revenue growth in Q4 2025, showcasing strong demand in its rental segment. Analysts have highlighted the potential for long-term growth in the business, particularly in its Showcase segment.
The stock dropped 17% recently due to concerns over legal costs and declining profitability. Insider selling has surged by 1546.66% in the last month, and the bearish technical indicators suggest further downside. Additionally, mixed analyst ratings and legal uncertainties surrounding the company's real estate listings distribution add to the negative sentiment.
In Q4 2025, revenue increased by 18.05% YoY to $654 million. However, net income dropped by -105.77% YoY to $3 million, and EPS fell by -104.55% YoY to $0.01. Gross margin also declined by 4% to 72.78%. The company's profitability metrics are deteriorating despite revenue growth.
Analyst sentiment is mixed. While Benchmark raised its price target to $110 and maintained a Buy rating, others like Mizuho and Cantor Fitzgerald downgraded or lowered price targets due to legal uncertainties and market structure concerns. The most recent target by Keefe Bruyette was lowered to $60, reflecting cautious sentiment.
