Zillow Costs Less Than $28 a Share. Here's Why I'd Still Not Buy One.
Legal issues and macroeconomic headwinds pose significant challenges for the real estate company.
Zillow's stock price has plummeted more than 60% over the past year, raising doubts about its prospects for recovery. Despite the company's second-quarter earnings showing an 18% year-over-year revenue growth and a 75% expansion in mortgage division revenue to $84 million, Zillow still posted a GAAP loss of $4 million. The stock is still trading at an eye-watering 124 times trailing earnings, making it a relatively cheap buy for a reason and not indicating an imminent turnaround.
Zillow faces a tough road ahead as it navigates macroeconomic challenges such as a slowing housing market and rising mortgage rates, legal battles, and stiff competition. Recently, the company lost access to over 30,000 listings in Chicago, which could severely undermine its competitive advantage if favorable antitrust rulings don't favor Zillow.
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