Zillow Costs Less Than $28 a Share. Here's Why I'd Still Not Buy One.
Key Points
Zillow's stock has fallen about 60% in 2026.
On the positive side, Zillow's revenue grew 18% year over year in the second quarter.
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In the past 12 months, Zillow's (NASDAQ: Z) share price has collapsed by more than 60% as of this writing. The reasons for the crash are multifaceted. The path to recovery looks increasingly difficult. The stock is cheap, but for a reason, and I don't see a turnaround anytime soon.
The second-quarter earnings weren't bad at all. Revenue grew 18% year over year, and the company's mortgage division expanded an impressive 75% to $84 million. The problem is that Zillow still posted a GAAP loss of $4 million in the quarter.
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Plus, even with the decline in share price, the stock is still trading at 124 times trailing earnings. The potential recovery isn't getting any easier, as Zillow contends with macroeconomic factors, including a slowing housing market and rising mortgage rates. It's also facing challenges in the form of legal matters and competition. Zillow was cut off from more than 30,000 listings in Chicago recently. The company's competitive edge could crumble if antitrust lawsuits don't go Zillow's way.
Image source: Getty Images.
Zillow needs to find a way to scale its end-to-end real estate journey for advisors, buyers, and sellers alike. It also needs to find other reliable sources of revenue to help better weather housing market slowdowns.
Between the legal troubles and a weak housing market, I don't foresee any relief for Zillow's investors in the coming years. Sure, the stock is below $28 per share, but it may still be a costly investment. I don't believe it's worth buying right now, not until management can prove there's a clear path to profitability and sustainability.
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Catie Hogan has no position in any of the stocks mentioned. The Motley Fool recommends Zillow Group. The Motley Fool has a disclosure policy.
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