After recording its first profitable year in over a decade, Zillow was rewarded with a tanking stock.
The home search portal’s stock opened down 4 percent following Tuesday night’s earnings, but fell roughly 17 percent over the course of the day. At press time, the stock was trading at $45.42, its lowest mark since August 2024.
Despite hitting its marks for 2025 with revenue growth of 16 percent and net income of $23 million, analysts expressed concern over the uncertainty around private listings and the legal challenges still facing Zillow.
Zillow is currently facing a number of lawsuits, and those legal fees appear to be weighing on the company’s bottom line after the company announced lower-than-expected estimates for the first quarter of 2026. Zillow expects EBITDA — earnings before interest, taxes, depreciation and amortization — to land between $160 million and $175 million in the first quarter, below the more $183 consensus estimates from Wall Street.
The lower-than-expected margins are the result of investment in Zillow’s ancillary businesses like rental and mortgage, but also of ramped-up legal fees, which chief financial officer Jeremy Hofmann said would alone drop margins by 2 percent in the first quarter.
“It will be a drag, but it’s not stopping us from expanding margins, which we expect to do throughout 2026,” he said of the legal expenses during Tuesday’s earnings call.
Zillow has been inundated with lawsuits. Residential brokerage Compass sued Zillow in June over its policy that threatened to ban listings not uploaded to its platform in a timely fashion. It’s also facing lawsuits from CoStar and the Federal Trade Commission related to its rentals business, and a set of lawsuits related to its home loans business.
In notes following the earnings call, analysts released notes that appeared to almost lament the overcast from legal actions on earnings outlooks.
“While legal challenges are very real and even a bit intimidating, [Zillow] continues to execute well and build credibility around its $5 [billion] revenue objective,” wrote BTIG’s Jake Fuller, adding that the lawsuits in part kept the firm “on the sidelines” with a neutral rating.
“There are a lot of moving pieces in this stock. We think absent the legal expenses, [Zillow] would be showing a nice step-up in incremental margins,” wrote Needham & Company’s Bernie McTernan in a note titled “Why’d You Have to Go and Make Things so Complicated?”
Listings fight
Beyond its more tangible legal fees, Zillow has also been facing existential questions surrounding its business model that have surfaced in its fight with Compass over private listings.
Zillow scored a decisive early win last week when a judge in the suit brought by Compass said the platform could keep its listing policy in place for the duration of the trial. But McTernan wrote that he sees the fight over private listings as “closer to the beginning than the end” after Compass acquired Anywhere Real Estate and its over 300,000 agents.
Only about 1 percent of listings are not available on Zillow, Wacksman said on the earnings call in response to questions about risks posed by private listings. “There are a very small share of cases where things don’t sell broadly on-market, and we expect that to continue,” he said.
But others in the industry have posited that Compass’ new scale gives it the ability to disrupt the status quo, even if Zillow’s listing policy stays. “[Brokers] are no longer going to give their data away for free and then have a third party come in and then sell it back,” real estate attorney Marx Sterbcow previously told The Real Deal, hinting at the current dynamic between Zillow and brokerages.
Zillow has also suffered from the flatlining housing market the past several years, and executives on the call said they don’t see much relief in the housing market in 2026. “We are planning for the For Sale environment to continue to bounce along the bottom,” Hofmann said, while pointing out that whenever sales do pick up, the company could see margins increase to the mid- to high-30 percent range.
Other stocks tied to residential real estate have also fallen today. Compass’ stock was down over 12 percent, Douglas Elliman was down over 8 percent and eXp Realty was down almost 10 percent as of Wednesday afternoon.
Read more
Residential
National
Zillow nabs $10M net income amid resi platform wars
Residential
National
Zillow turned fourth-quarter profit despite lawsuits, flat housing market