Zillow’s Stock Plummets 17% Despite Surpassing Revenue Predictions Amid Rising Housing Worries
Zillow Group shares took a nosedive, plummeting as much as 20% on Wednesday. This marked the online real estate marketplace’s worst day since November 2021. The company’s disappointing first-quarter guidance, despite surpassing fourth-quarter revenue expectations, led to this decline. The stock ended the day 17% lower, sparking a wider selloff across real estate-related stocks including CBRE and Rocket Companies, which both fell by approximately 10%.
The Seattle-based company reported a fourth-quarter revenue of $654 million, slightly above the analyst estimates of $650.5 million. This represents an 18.1% year-over-year growth. However, the company’s adjusted EBITDA of $149 million fell short of the $151.5 million consensus estimate. The most alarming for investors was the plunge of Zillow’s free cash flow margin to 6.7% from 15.9% in the same quarter last year, raising questions about its cash generation efficiency.
Despite CEO Jeremy Wacksman celebrating the company’s achievement of all full-year financial targets, including a positive net income for 2025, investors were more focused on operational challenges. For the full year of 2025, Zillow reported a revenue of $2.6 billion, a 16% year-over-year increase, significantly outperforming the broader residential real estate industry’s 3% growth. These mixed results underscore the ongoing challenges in the housing market as the company grapples with increased competition and evolving market dynamics.