Zillow Group shares have fallen sharply toward 52-week lows, potentially putting the online real estate giant back on investors’ radars.
Zillow’s Class C shares Z) and Class A shares ZG) are both trading around $30, just above their respective 52-week lows of $29 a share.
However, the housing backdrop remains challenging. The Federal Reserve raised its benchmark rate by 25 basis points this week to a range of 3.75%-4.00%, while the average 30-year fixed mortgage rate has climbed to 6.95%, up from 6.76% a week earlier and 6.26% a year ago.
While the Fed does not directly set mortgage rates, additional monetary tightening can reinforce elevated borrowing costs and housing affordability concerns—a clear near-term headwind for Zillow’s home-buying and mortgage ecosystem.
Image Source: Federal Reserve Economic Data
Z vs. ZG: What's the Difference?
Investors essentially get exposure to the same underlying Zillow business with either ticker.
ZG represents Zillow's Class A common stock, which carries voting rights, while Z represents Class C shares, which generally have no voting rights. Zillow also has unlisted Class B shares with enhanced voting power.
For most investors focused primarily on Zillow's financial performance, the economic exposure of Z and ZG is largely similar, although the shares can trade at slightly different prices because of voting rights, liquidity, and supply.
Zillow's Growth Outlook Remains Solid
Despite housing-market weakness, Zillow continues to grow faster than the broader residential real estate market.
Most recently, Q2 revenue increased 18% to $772 million, with residential revenue rising 7%, rentals revenue jumping 31%, and mortgage revenue surging 75% as purchase-loan originations nearly doubled.
Management expects 2026 revenue of $2.92-$2.96 billion (+13% growth) and adjusted EBITDA of $730-$760 million (+17% growth).
Meanwhile, the Zacks Consensus calls for EPS of $2.22 this year, up 35%, followed by another 21% increase to $2.69 per share in 2027. That said, FY26 and FY27 earnings estimates are slightly down in the last 60 days, reflecting the more difficult housing environment.
Zillow's Valuation Looks More Appealing
The selloff has made Zillow’s valuation considerably more appealing, with Z and ZG shares trading at roughly 13X forward earnings and near the often preferred level of less than 2X forward sales.
Both metrics offer a compelling discount to the benchmark S&P 500, although inexpensive shares alone may not be enough to overcome another prolonged period of elevated mortgage rates.
Bottom Line
Zillow's plunge toward 52-week lows has created a much more reasonable valuation, while double-digit revenue growth and strong expansion across its mortgage and rental businesses provide reasons for longer-term optimism.
However, the Fed's latest rate hike and mortgage rates approaching 7% could keep housing activity subdued and limit Zillow's near-term upside.
For now, Zillow's Z and ZG shares both land a Zacks Rank #3 (Hold), suggesting investors may want to see greater improvement in the interest-rate and housing outlook before aggressively buying the dip.
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This article originally published on Zacks Investment Research (zacks.com).