Zillow Stock Dips as Google Explores Real Estate Listings
Zillow Group shares experienced a significant downturn, dropping over 9% on Monday amid speculation that Google, the dominant search engine, may be entering the online real estate market. This development has raised concerns among investors about potential new competition for the digital real estate platform.
Reports surfaced over the weekend, highlighted by real estate technology analyst Mike DelPrete, showcasing screenshots of Google Search results that appear to integrate real estate sale listings. These listings, reportedly powered by data from HouseCanary, offer functionalities similar to those found on Zillow.com, including detailed property information, tour requests, and agent contact options. Currently, Google’s real estate search feature seems to be in a testing phase, limited to select markets and mobile devices.
The stock’s decline, which saw an intraday drop of more than 11%, translated to a market capitalization loss of approximately $1.6 billion, bringing Zillow’s market value to around $16.26 billion. This reaction suggests that the market is already pricing in the potential impact of Google’s expansion.
However, some Wall Street analysts remain cautiously optimistic about Zillow’s immediate resilience. They point to the fact that Zillow’s revenue is not heavily reliant on organic search traffic. Wells Fargo analyst Alec Brondolo noted that a shift from organic to paid listings on Google might not have a substantial financial impact on Zillow in the short term. Brondolo drew a parallel to Google’s hotel metasearch model, suggesting that Google would likely offer ad units for real estate listings, rather than directly competing with portals like Zillow. This would imply that Zillow, Homes.com, and Realtor.com would likely bid on these ad spaces.
Despite these near-term reassurances, the broader implications of Google’s move are being viewed as a potential long-term headwind for Zillow and other established real estate portals. Goldman Sachs analyst Michael Ng believes that Google’s real estate listings, by facilitating lead generation for agents, directly challenge Zillow’s Premier Agent program. While acknowledging that Zillow’s substantial direct traffic through its own platforms mitigates immediate risk, Ng identified this as a significant long-term threat.
Similarly, Jason Helfstein of Oppenheimer suggested that Google’s entry could eventually affect the sheer volume of consumers visiting Zillow.com, which recorded 228 million unique visitors in the third quarter. This, in turn, could impact Zillow’s ability to monetize its platform effectively. Helfstein emphasized that any meaningful impact on real estate portal traffic would likely take years to materialize and would require a nationwide rollout of Google’s service.
Zillow’s stock performance year-to-date has been a concern, with shares down over 8%. Neither Google nor Zillow immediately responded to requests for comment.
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