Z Should I Buy
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Zillow Group Inc (Z) is not a strong buy at the moment for a beginner investor with a long-term strategy. While the stock has some positive developments, such as stable technical indicators and a modest price recovery, the lack of strong proprietary trading signals, ongoing litigation risks, and weak financial performance in the latest quarter make it prudent to hold rather than buy.
The MACD is positive and contracting, indicating a mild upward momentum. RSI is neutral at 51.545, suggesting no clear overbought or oversold conditions. Moving averages are converging, and the stock is trading near its pivot level of 43.897, with key resistance at 47.396 and support at 40.398.
Analysts view the recent 25% pullback as an overreaction, citing strong fundamentals.
The dismissal of the Compass antitrust lawsuit removes a significant overhang.
A decrease in mortgage rates could signal a potential market recovery.
Ongoing litigation risks, including a class action investigation by the Rosen Law Firm.
Weak financial performance in Q4 2025, with a significant drop in net income (-105.77%) and EPS (-104.55%).
Concerns around AI disruption and regulatory scrutiny.
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% to 0.01. Gross margin also decreased by 4% to 72.78.
Analysts have mixed ratings. Keefe Bruyette maintains a Market Perform rating with a $60 price target, citing ongoing risks from Compass's strategies. JPMorgan sees the recent selloff as a buying opportunity, emphasizing Zillow's strong fundamentals and defensible moat against AI disruption.
