Zillow Group, Inc. shares were trading at $67.80 on January 13th. The stock declined more than 5.5% following reports that Google is testing a new mobile-focused real estate advertising format.
Google's product integrates property listings directly into search results. Users can view detailed property information, apply filters such as price and size, and request home tours through a button that connects them with local agents, often within minutes.
The product appears to source listings via partnerships, including with ComeHome, which reportedly accesses Multiple Listing Service data. This reduces reliance on listing agents and intensifies direct competition with Zillow's Premier Agent program, a critical revenue driver.
Goldman Sachs maintains that the near-term impact may be limited due to Zillow's largely direct traffic and Google's initial rollout being restricted to select markets and mobile browsers. However, the longer-term implications are more concerning.
Google's distribution power, control over search discovery, and ability to keep users within its ecosystem threaten Zillow's role as the default starting point for home searches. Over time, this could pressure Zillow's traffic acquisition and weaken pricing power for agent advertising.
Even if adoption is gradual, the strategic risk lies in Google's capacity to iterate quickly and scale nationally. This development reinforces a bearish view that Zillow's competitive moat may be narrower than previously assumed.
According to Yahoo Finance, Zillow's forward P/E was 32.89. A bearish thesis on Zillow Group was posted on an investing subreddit by Guy_PCS, who shares a contrarian view but emphasizes platform risk.
Zillow Group operates real estate brands in mobile applications and websites in the United States. The company is not on the list of 30 Most Popular Stocks Among Hedge Funds. As per database information, 74 hedge fund portfolios held ZG at the end of the third quarter, which was 62 in the previous quarter.