Zillow (ZG) Stock Trades Up, Here Is Why

What Happened?

Shares of online real estate marketplace Zillow (NASDAQ:ZG) jumped 1.6% in the afternoon session after the stock hit a 52-week high, reflecting strong investor confidence in the company's performance. The stock reached $89.42, underscoring a significant upward trend and a remarkable increase of 64.83% over the last 12 months. This momentum is supported by strong financial metrics, including revenue growth of 15.31%.

After the initial pop the shares cooled down to $86.49, up 2% from previous close.

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What Is The Market Telling Us

Zillow’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 10 months ago when the stock gained 25.2% on the news that the company reported strong third-quarter earnings that exceeded analysts' revenue, EBITDA, and EPS expectations. However, Q4 guidance was mixed, with revenue in line while EBITDA came in below. Regardless, the results were encouraging amid a challenging operating environment as elevated rates have impacted the purchasing power of home buyers, leading to lower transaction volumes. However, for Zillow, the situation is more encouraging as technical updates to user experience and the introduction of new features drove user engagement on its platform. As a plus, the company is also diversifying income sources from its traditional real estate listings by offering services such as mortgage lending and rental platforms. Zooming out, we think this was a solid quarter, and the market seems to be focusing on the quarterly beats.

Zillow is up 23.4% since the beginning of the year, and at $86.49 per share, has set a new 52-week high. Investors who bought $1,000 worth of Zillow’s shares 5 years ago would now be looking at an investment worth $1,074.

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