MW Why the bad news that sank Zillow's stock is good for new investors

By Steve Gelsi

Analyst who has been neutral on Zillow's stock for years just turned bullish after the recent selloff, saying it now offers potential 20% upside

Wall Street has overreacted to some recent bad news about Zillow, one analyst said.

A sharp drop in Zillow Group Inc.'s stock over the past couple of weeks has opened up an opportunity for investors, who have been looking for the right time to buy into the online real-estate listings company.

Gordon Haskett analyst Robert Mollins said now is the time to buy the stock, because Wall Street has overreacted to some recent bad news. Through Thursday, the stock (Z) had tumbled 17.1% since it closed at a four-year high on Sept. 17.

"We view the recent share price weakness as an attractive entry point into a company that continues to innovate and capture market share in a challenging housing environment," Mollins wrote in a research note.

Mollins upgraded Zillow's stock to buy, after being at hold since at least April 2023, according to the note. His stock-price target of $90, where the stock was before the recent selloff, implies about 16% upside from current levels.

Zillow's stock rallied 3.6% in morning trading. It had closed Wednesday at a three-month low.

Zillow's shares have declined due partly to speculation over increased competition resulting from the Sept. 22 announcement of Compass Inc.'s $(COMP)$ $1.6 billion acquisition of rival Anywhere Real Estate Inc. (HOUS), he said.

But Mollins believes the company will fare better than some expect - just as it did when Homes.com's investment to compete against Zillow did little to impact the latter's leadership position.

"Our work suggests that Zillow will be able to hold its own against Compass as the portal generates about 25x more visits per month than Compass," he said.

A lawsuit filed Sept. 30 by the Federal Trade Commission over Zillow's listing alliance with Rocket Cos.' $(RKT)$ Redfin spooked investors, but Mollins said it is less ominous that some may fear.

"We think investors have overreacted," he said. "Zillow grew its rentals business quickly before the Redfin partnership and wouldlikely experience only a modest headwind if the partnership dissolves."

The FTC's move came after Zillow said in February that it would make an upfront payment of $100 million to Redfin to become its exclusive provider of listings for multifamily rentals of 25 or more units.

With his target price of $90 a share, Mollins is now slightly more bullish than the mean price target of $89.12 a share among the 32 analysts surveyed by FactSet who cover Zillow.

Zillow shares have gained 4.7% in 2025, while the S&P 500 index SPX has advanced 14.3%.

-Steve Gelsi

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October 03, 2025 10:28 ET (14:28 GMT)

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