A Look At Zillow Group (ZG) Valuation As New AI Mode And Zillow Preview Gain Traction

Zillow Group (ZG) is in focus after rolling out Zillow AI mode and rapidly scaling Zillow Preview, two products that more closely connect its real estate marketplace to consumer decisions and agent workflows across buying, selling and renting.

See our latest analysis for Zillow Group.

Despite the product momentum around Zillow AI mode and Zillow Preview, the share price has seen a 1-day return of a 3.13% decline and a 90-day share price return of a 39.59% decline, while the 1-year total shareholder return is a 38.90% decline, pointing to fading momentum even as new tools reshape how users interact with the platform.

If you are interested in how AI is reshaping other corners of the market, this is a good moment to widen your search and check out 33 AI small caps

With Zillow shares down sharply over the past year and trading at a discount to one commonly cited price target, yet supported by new AI products and reaffirmed guidance, is this a reset that opens a buying window, or is the market already accounting for the company’s next phase of growth?

Most Popular Narrative: 44% Undervalued

At a last close of $42.04 against a narrative fair value of $74.78, the most followed view sees a wide gap that hinges on Zillow turning digital scale into higher quality earnings and cash flow.

The shift toward integrated, end to end digital transaction ecosystems (like Zillow 360 and Enhanced Markets) is enabling Zillow to capture more ancillary services revenue (mortgages, rentals, software), reducing dependence on advertising and expanding top line growth as well as supporting EBITDA margin expansion through operational efficiencies.

Read the complete narrative.

Curious how this ecosystem story turns into that valuation gap? The narrative leans heavily on future revenue mix, margin expansion and compounding earnings power.

Result: Fair Value of $74.78 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there is still real risk that tougher listing rules, legal outcomes, and pressure on Premier Agent spending could challenge the AI-led upside story.

Find out about the key risks to this Zillow Group narrative.

Another View: Multiples Point To A Richer Price

While the SWS model suggests Zillow is trading 57.1% below its estimated fair value based on future cash flows, the current P/S ratio of 3.9x tells a different story. That level is higher than both the US Real Estate industry at 2.6x and the estimated fair ratio of 3.5x, which implies less room for error if growth or margins fall short.

For investors, the question is simple: does a richer revenue multiple against peers and the fair ratio feel like a reasonable price to pay for Zillow's AI and platform ambitions, or is it asking a bit too much from the story?

See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With sentiment clearly mixed, it helps to move quickly and review the facts yourself before opinions harden across the market. To understand what is driving current optimism, take a closer look at the 3 key rewards.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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