Zillow (ZG) Stock Forecast & Price Target

Zillow Group is supported by a powerful monetization shift toward Preferred connections, which management expects to reach more than 75% by the end of 2026 versus 44% at year-end 2025, and that mix change is already driving 23% more combined revenue per connection in 2025 with a target of about 35% uplift by the end of 2026. The company’s economics are unusually attractive because Zillow Home Loans carries an implied ~20-point margin advantage from near-zero customer acquisition costs, Residential revenue still grew 7% year over year despite weaker purchase market conditions, and Mortgages revenue rose 75% year over year on 95% growth in purchase origination volume. Further, Rentals is scaling with about 79,000 multifamily properties and 2.8 million average monthly active rental listings, while AI Mode is increasing engagement by driving users to spend 3x+ as long, view 2x+ as many homes, and contact agents at ~3x the rate, reinforcing the platform’s ability to capture higher-intent demand across the full home journey.

Zillow Group is facing a fundamentally tougher backdrop because mortgage-to-income remains around ~34% and needs to fall to ~30% or below for a meaningful recovery in transaction volume, while high-end demand is softening and traffic is still modestly down, limiting the company’s ability to convert its dominant audience into sustained growth. Although 2Q'26 results beat expectations with consolidated revenue up 18%, 2Q adj. EBITDA of $176M, and strong contributions from For Sale (+14%), Mortgages (+75%), and Rentals (+31%), the company’s accelerated shift to Zillow Preferred is creating revenue-recognition timing pressure, and management’s 3Q’26 guide for $745M-$760M of revenue and $180M-$200M of adjusted EBITDA sits below consensus and prior expectations. The bearish case is reinforced by structural and execution risks around TAM in the core Premier Agent business, rising competition, lower agent ROI, and continued investment needs that could slow margin expansion, evidenced by the downward revision of 2027 revenue by 2%, the reduction of 2027 adjusted EBITDA from $957.8M to $915.8M, and the expectation that macro headwinds and heavier spending will constrain the pace of monetization.