Zillow Group, Inc. (ZG): A Bear Case Theory 

We came across a bearish thesis on Zillow Group, Inc. on investing subreddit by Guy_PCS. In this article, we will summarize the bears’ thesis on ZG. Zillow Group, Inc.’s share was trading at $67.80 as of January 13th. ZG’s forward P/E was 32.89 according to Yahoo Finance.

Zillow Group, Inc. operates real estate brands in mobile applications and Websites in the United States. ZG faced renewed investor concern after its stock declined more than 5.5% following reports that Google is testing a new mobile-focused real estate advertising format that could structurally challenge Zillow’s core marketplace model. Google’s new product integrates property listings directly into search results, allowing users to view detailed property information, apply filters such as price, size, and listing status, and request home tours through a “Request a tour” button that connects them with top-rated local agents, often within minutes.

By embedding these functions natively within search, Google is effectively replicating key features that have historically driven traffic and monetization for Zillow’s platform. Importantly, the product appears to source listings via partnerships, including with ComeHome, which reportedly accesses Multiple Listing Service data, reducing reliance on listing agents and intensifying direct competition with Zillow’s Premier Agent program, a critical revenue driver that monetizes buyer-side leads.

While Goldman Sachs maintains that the near-term impact may be limited due to Zillow’s largely direct traffic and Google’s initial rollout being restricted to select markets and mobile browsers, the longer-term implications are more concerning. Google’s unmatched distribution power, control over search discovery, and ability to keep users within its ecosystem threaten Zillow’s role as the default starting point for home searches.

Over time, this could pressure Zillow’s traffic acquisition, weaken pricing power for agent advertising, and compress margins if lead generation becomes more commoditized. Even if adoption is gradual, the strategic risk lies in Google’s capacity to iterate quickly and scale nationally. As a result, this development reinforces a bearish view that Zillow’s competitive moat may be narrower than previously assumed, introducing structural uncertainty into its long-term growth and monetization outlook.

Previously, we covered a bullish thesis on Opendoor Technologies Inc. by LongYield in May 2025, which highlighted margin discipline, liquidity strength, cost reductions, and the shift toward an asset-light platform model. The company’s stock price has appreciated by approximately 676.37% since our coverage. This is because operating leverage improved sentiment. The thesis still stands as the balance sheet strength remains intact. Guy_PCS shares a contrarian view but emphasizes platform risk.

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Disclosure: None.