Zillow remains one of our high-conviction positions in the International Equities Portfolio, even as the share price has corrected in recent months. We’ve owned the stock since mid-2024 (around $46), and while it has been volatile—typical for high-growth, high-valuation names—the fundamental story remains intact. We view recent weakness as an opportunity to lean in for those members looking for a solid risk/reward entry into a high growth, dominant real-estate platform operating in a big market.
As we wrote in our last update in August, the U.S. housing market has been described as “bumbling along the bottom,” yet Zillow continues to put up impressive numbers, with strong top line revenue growth (+13%) underpinning a similar uplift in earnings. Average monthly users of their platform continue to rise, with 2.6bn total visits last quarter —a scale unmatched in U.S. real estate.
Management continues to target low to mid-teens revenue growth with margin expansion, which, if delivered, justifies Zillow’s premium multiple (PE of 36x). As we’ve often written, platform businesses like REA here in Australia create a technology moat that forces buyers and advertisers to participate. Zillow has established that same dynamic in a much larger pond.
Consensus is expecting earnings to compound at ~35% over the next three years, justifying its current earnings multiple, particularly given its 15% pullback in share price. This is clearly the type of stock that sits at the “pointy end” of risk-off trade flows, but history shows these are the dips are often the ones to buy—not sell. We continue to see Zillow as a long-term structural winner.
Overnight news flow was negative, with shares down 4.5%. The FTC has filed a complaint against Zillow and Redfin over their multifamily rental advertising partnership, arguing the $100m deal “eliminates a competitor.” Additionally, CoStar (who recently acquired Domain) has reiterated its intellectual property lawsuit against Zillow, claiming infringement on its real estate photo library.
While both suits add noise in the near term, we don’t believe they threaten Zillow’s core business model. Antitrust challenges around market share and platform scale are not new to dominant digital platforms (Google, Meta, REA locally) and rarely derail long-term economics. Zillow has defended the Redfin deal as pro-consumer and pro-competitive, and even in the event of forced changes, we see little impact on the long-term structural growth story. Importantly, none of these issues alter Zillow’s unique scale, brand power, or user engagement, which remain the real moat.
- We remain bullish on Zillow, which is executing strongly in a tough market, positioning it for material upside when U.S. housing conditions improve.
MM is long Zillow in the International Equities Portfolio.
Add To Hit List
