Zillow’s stock (ZQ) took a hit despite reporting a surprise first-quarter profit. The company posted a net income of $8 million, a stark contrast to the forecasted $9 million loss. While its revenue of $598 million also beat expectations, Zillow’s stock fell 2.8% in premarket trading. The disappointment came after the company offered weak second-quarter guidance. This made investors cautious about what’s ahead.
Zillow’s Q2 Outlook Falls Short of Analysts’ Hopes
Despite a stellar first quarter, Zillow’s second-quarter outlook left much to be desired. The company projected Q2 revenue between $635 million and $650 million, with adjusted EBITDA ranging from $140 million to $155 million. Wall Street had higher hopes, with analysts expecting $649 million in revenue and adjusted EBITDA of $163 million. This softer-than-expected guidance sent Zillow’s stock into a tailspin.
“We’re well-positioned to deliver sustainable profitable growth,” said CEO Jeremy Wacksman. He touted the company’s expanding “housing super app” and growing user base. But with a more subdued housing market, investors were less enthused by Zillow’s outlook.
Housing Market Struggles Weigh on Zillow’s Performance
The broader housing market has remained sluggish in 2025. Despite Zillow’s business model overhaul, its stock has dropped 8.3% this year. Home prices are still high, and the spring selling season has been disappointing. Zillow’s transformation has focused on expanding its platform for real estate professionals, but the market challenges remain a tough hurdle.
In late 2021, Zillow shifted its focus away from buying and selling homes through its “Zillow Offers” division. It now makes money by selling leads to real estate agents and offering a suite of services such as workflow management tools. Yet, even with these changes, the soft housing market continues to weigh on Zillow’s growth prospects.
What’s Next for Zillow in a Tough Housing Market?
Looking ahead, Zillow remains cautiously optimistic about 2025. The company is forecasting low-to-mid teens revenue growth and a 40% increase in rental-segment revenue. But with a cooler-than-expected housing market and cautious guidance for Q2, Zillow has to prove its adaptability in an unpredictable environment.
Is Zillow Stock a Good Buy?
Zillow currently holds a Moderate Buy rating from 18 analysts, with 10 analysts recommending a Buy, seven holding a Hold rating, and one issuing a Sell. The average 12-month ZQ price target is $80.13, which represents a 20.61% upside from its last closing price of $66.44. Analysts are optimistic about Zillow’s potential, with the highest price target sitting at $110.00, while the lowest estimate is $60.00. This forecast reflects confidence in Zillow’s long-term prospects, despite the challenges facing the housing market.
