Down 53%, Can Zillow Make a Comeback?
Key Points
Zillow's mortgage revenue grew 56% in its latest quarter.
Google plans to show MLS listings directly in search in all 50 states.
That could cut into Zillow's traffic and significantly threaten its business.
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It's fun to peruse Zillow (NASDAQ: Z); it's less fun to be a shareholder in Zillow. The stock is down more than 50% year to date. Zillow is facing both broader macroeconomic challenges in the housing market and increased competition from Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google Home Listings.
So can the real estate platform make a comeback? Let's have a look.
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Google is expanding its search ads for real estate listings to all 50 states. This means Google will display MLS-listed properties directly in search results and connect buyers with local agents. It is a direct and substantial threat to Zillow's core business of sourcing leads and advertising for agents.
Zillow is combating this by diversifying its revenue streams. The company's rental business grew 42% in the first quarter of 2026. Zillow also has Zillow Home Loans and a mortgage marketplace for buyers who need to finance their purchases. The company is moving to become an artificial intelligence (AI)-native platform to make the home-buying and renting processes even more customized.
Image source: Getty Images.
Zillow's first-quarter revenue grew 18% year over year to $708 million. Mortgage revenue jumped 56%, specifically from mortgage loan origination volume.
Zillow's dominance is now in question
The strong quarter was all before Google made this big announcement. It's now an uphill battle for Zillow. It is competing against one of the world's largest and most powerful information machines in Google. Continued efforts to diversify revenue streams should be Zillow's main focus. The real estate platform also needs the housing market to improve in the long term to sustain growth assumptions.
Yes, Zillow's stock is inexpensive right now. However, with Google firing a direct shot at its core business, it may be prudent to wait a quarter or two to see how this begins to affect Zillow's earnings and how forcefully the company will respond.
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Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Zillow Group. The Motley Fool has a disclosure policy.
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