Zillow Group falls as higher mortgage rates pressure housing-linked stocks

The US Supreme Court declined to hear Zillow Group's appeal in a 2021 investor lawsuit, allowing the case to proceed. The lawsuit alleges Zillow misled investors about its home-flipping business, Zillow Offers, which was shut down in November 2021. The company reported a $300 million loss and announced workforce cuts. Investors claim Zillow's leadership made overly optimistic statements before the shutdown.

Zillow Group Inc. (Z) shares dropped 10% after a court denied its injunction request in a legal dispute with Compass, compounded by Fed rate hikes impacting the real estate sector. GF Value™ estimates Zillow as 62.3% undervalued at $29.82, with a GF Score™ of 64/100. Insider sales totaled $15.1M over the past year, while 7 premium gurus hold the stock with mixed activity.

A federal judge denied Zillow's injunction against the Chicago MLS (MRED) and Compass, allowing private listing networks to operate. The ruling may enable MLSes to expand nationally with private networks, though Zillow argues these networks harm transparency and market access. The case is now in arbitration, with Congress also scrutinizing the practices.

Zillow Group's shares (Z, ZG) are near 52-week lows around $30, amid challenging housing conditions due to rising mortgage rates. Q2 revenue grew 18% to $772M, with strong performance in rentals and mortgage segments. Management forecasts 2026 revenue of $2.92B-$2.96B and adjusted EBITDA of $730M-$760M. Despite a more appealing valuation, near-term upside may be limited by elevated mortgage rates.

Zillow (Z) faces legal setback as a court denies its injunction request against MRED, risking loss of Chicago listings. Stock fell 2% to $31.96. GF Value™ estimates Zillow is 59.5% undervalued at $31.96 vs. $78.88 intrinsic value. Insiders sold $15.1M shares over 12 months. GF Score™ is 64/100, with strong financial health but weak profitability.

Zillow is facing a shareholder lawsuit alleging antitrust risks and misleading statements regarding its deal with Redfin. The complaint claims executives sold $81M in stock before the FTC lawsuit and stock price drop. The plaintiff seeks damages and governance changes. Zillow denies wrongdoing, calling the deal pro-competitive.