Zillow Stock Extends Slide After Earnings As Legal Costs Cloud Outlook

Zillow Group Inc (NASDAQ: Z) (NASDAQ: ZG) stock is trading lower Thursday morning, extending Wednesday’s steep sell-off after the online real estate company's latest earnings and guidance. Here’s what investors need to know.

• Zillow stock is showing downward bias. Where is ZG stock headed?

Post-Earnings Volatility Continues Thursday

Thursday’s volatility follows Wednesday's drop, when shares fell more than 17% and hit a new 52-week low after the company reported fourth-quarter results Tuesday evening.

Zillow posted revenue of $654 million for the quarter, topping Wall Street estimates of about $650 million, while adjusted earnings of 39 cents per share came in just shy of the 40 cent consensus.

Management guided first-quarter revenue to a range of $700 million to $710 million, ahead of expectations near $690 million, signaling continued top-line momentum even as investors focus on profitability.

Legal Costs And New Rivals Pressure Valuation

Despite improving core operations, analysts warn that rising legal expenses and fresh competitive threats are weighing on sentiment. Needham analyst Bernie McTernan reiterated a Hold rating after earnings, trimming his 2026 earnings forecast and highlighting "multiple moving parts" in the story, including elevated legal costs and the emergence of private listing networks.

These networks remain a small slice of listings today, but Zillow recently won a preliminary injunction in a dispute tied to Compass Inc and its marketing strategy, a fight that could intensify following Compass's purchase of Anywhere Real Estate Inc. Analysts caution that the legal overhang and structural uncertainty could cap the stock's valuation near term.

Long-Term Upside Hinges On Housing Recovery

Looking further out, McTernan models roughly 50% incremental margins in 2025 excluding legal costs, with potential for incremental adjusted EBITDA margins to reach about 60% in 2027 if legal spending normalizes and the housing market returns to mid-cycle conditions.

That leaves Zillow positioned as a possible beneficiary of a gradual housing recovery, but for now, investors appear focused on the legal bill and competitive risks rather than the long-term upside.

RSI Signals Oversold Conditions

The chart shows Zillow shares moving from mostly neutral levels into oversold territory, with the relative strength index (RSI) recently falling below 30. That drop indicates intensified selling pressure in the wake of recent losses, placing the stock at levels typically associated with stretched downside momentum.

Zillow’s Analyst Outlook

Analyst Consensus & Recent Actions: The stock carries a Buy Rating with an average price target of $80.82. Recent analyst moves include:

• Goldman Sachs: Neutral (Lowers Target to $62.00) (Feb. 11)
• Piper Sandler: Overweight (Lowers Target to $70.00) (Feb. 11)
• Wells Fargo: Equal-Weight (Lowers Target to $60.00) (Feb. 11)

Zillow Shares Edge Lower Thursday

ZG Price Action: Zillow Gr shares were down 2.45% at $44.54 at the time of publication on Thursday, according to Benzinga Pro data.

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