Zillow Is Betting on a Housing Super App. What Wall Street Thinks.

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Zillow Group announced plans to shut down its home-flipping business in November.

Chris Goodney/Bloomberg


‘s spectacular decision to shut down its home-flipping business last year has left the stock battered and bruised, and investors feeling wary.

But the company has a plan to emerge from the ashes of its homebuying and selling exit—a ‘housing super-app.’ The idea is to bring together “all the fragmented pieces of the moving process” on one platform. 

The company set a target of $5 billion in annual revenue by the end of 2025, aided by the app and by driving engagement, and increasing customer transactions and revenue per transaction. That is close to double the $2.67 billion revenue analysts expect Zillow (ticker: Z) to post in 2023.

Investors are already feeling more buoyed, with the stock climbing more than 18% in morning trading Friday. That came after the online real estate services company posted better-than-expected results in the fourth quarter and said the winding down of iBuying was progressing well—it has been selling homes faster than it expected at better prices.

Zillow stunned the market in November by announcing it would shut down its algorithmic-driven home-flipping business, citing unpredictability in forecasting home prices. The company also said it would lay off approximately 25% of its workforce, or around 2,000 workers. Most of that will come into effect in the first half of 2022, it said in a filing Thursday.

The stock has fallen 52% since the end of October, as of Thursday’s close, plunging 25% in a single day on Nov. 3 following its iBuying exit announcement.

The big questions for Zillow this earnings season were what happens next and what is the plan for growth. Investors now have a plan and new targets to digest.

Benchmark analyst Daniel Kurnos said he expected investors to meet the new guidance with a “healthy dose of skepticism.”

“Regardless, we think shares are still cheap even if Zillow were only able to manufacture half the projected 24% compound annual growth rate as long as margins stay north of 40%,” he added.

Investors don’t seem to be showing much skepticism in premarket trading Friday and Wall Street also seems to like what it has seen, if not a little cautiously.

“The forward strategy carries significant long-term upside potential, in our view, given a much more palatable asset-light strategy, Zillow’s clear category dominance for intentful real estate buyers and sellers,” RBC Capital Markets analyst Brad Erickson said. He lowered his price target on the stock to $70 from $100 but maintained an Outperform rating.

Evercore ISI analysts were also “cautiously optimistic” over the company’s ability to turn itself around into its ‘super app,’ citing Zillow’s initiatives in touring, mortgages, and seller services.

But they are staying on the sidelines for now, until there is more proof behind the story. “We think more visibility around execution is needed until we are more comfortable around its 2025 aspirations,” they added, lowering their price target to $84 from $89 and maintaining an In Line rating.

Write to Callum Keown at

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