Zillow Group, Inc. (ZG): A Bear Case Theory

We came across a bearish thesis connected Zillow Group, Inc. connected investing subreddit by Guy_PCS. In this article, we volition summarize the bears’ thesis connected ZG. Zillow Group, Inc.'s stock was trading astatine $67.80 arsenic of January 13th. ZG’s guardant P/E was 32.89 according to Yahoo Finance.

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Zillow Group, Inc. operates real property brands successful mobile applications and Websites successful the United States. ZG faced renewed capitalist interest aft its banal declined much than 5.5% pursuing reports that Google is investigating a caller mobile-focused existent property advertizing format that could structurally situation Zillow’s halfway marketplace model. Google’s caller merchandise integrates spot listings straight into hunt results, allowing users to presumption elaborate spot information, use filters specified arsenic price, size, and listing status, and petition location tours done a “Request a tour” fastener that connects them with top-rated section agents, often wrong minutes.

By embedding these functions natively wrong search, Google is efficaciously replicating cardinal features that person historically driven postulation and monetization for Zillow’s platform. Importantly, the product appears to source listings via partnerships, including with ComeHome, which reportedly accesses Multiple Listing Service data, reducing reliance connected listing agents and intensifying nonstop contention with Zillow’s Premier Agent program, a captious gross operator that monetizes buyer-side leads.

While Goldman Sachs maintains that the near-term interaction whitethorn beryllium constricted owed to Zillow’s largely direct traffic and Google’s initial rollout being restricted to prime markets and mobile browsers, the longer-term implications are much concerning. Google’s unmatched organisation power, power implicit hunt discovery, and quality to support users wrong its ecosystem endanger Zillow’s relation arsenic the default starting constituent for location searches.

Over time, this could unit Zillow’s postulation acquisition, weaken pricing powerfulness for cause advertising, and compress margins if pb procreation becomes much commoditized. Even if adoption is gradual, the strategical hazard lies successful Google’s capableness to iterate rapidly and standard nationally. As a result, this improvement reinforces a bearish presumption that Zillow’s competitory moat whitethorn beryllium narrower than antecedently assumed, introducing structural uncertainty into its semipermanent maturation and monetization outlook.

Previously, we covered a bullish thesis connected Opendoor Technologies Inc. by LongYield successful May 2025, which highlighted borderline discipline, liquidity strength, outgo reductions, and the displacement toward an asset-light level model. The company's banal terms has appreciated by astir 676.37% since our coverage. This is due to the fact that operating leverage improved sentiment. The thesis inactive stands arsenic the equilibrium expanse spot remains intact. Guy_PCS shares a contrarian presumption but emphasizes level risk.