Does Zillow Group’s (ZG) Capital Moves Hint at a New Phase in Its Profitability Story?

• Zillow Group, Inc. recently reported fourth‑quarter 2025 results showing revenue of US$654 million and net income of US$3 million, marking a return to profitability for the full year with US$23 million in net income on US$2.58 billion of revenue.
• Around the same time, Zillow completed a large share repurchase program while also filing a US$757.93 million shelf registration for 13,853,650 Class C shares tied to an ESOP, highlighting a balance between returning capital to shareholders and planning for future equity issuance.
• We’ll now examine how this return to profitability, alongside expected legal cost pressures on 2026 earnings, influences Zillow’s investment narrative.

Invest in the nuclear renaissance through our list of 85 elite nuclear energy infrastructure plays powering the global AI revolution.

Zillow Group Investment Narrative Recap

To own Zillow Group, you need to believe its leading online real estate platform can translate high user engagement into durable profits, even when housing transactions are soft. The key near term catalyst is whether its integrated transaction and rentals ecosystem can keep improving margins, while the biggest current risk is rising legal and regulatory costs that management has flagged as a drag on 2026 earnings. The latest results and guidance meaningfully sharpen that legal overhang for shareholders.

The most relevant recent development here is Zillow’s completion of a multi‑year buyback that retired about 22% of its shares for US$2.65 billion. That capital return, followed by the new US$757.93 million Class C shelf registration tied to an ESOP, sits against a backdrop of a stock that has fallen about 44% over the past year, raising questions about how future equity issuance, legal expenses and execution on rentals and end‑to‑end transactions will influence per share outcomes.

Yet beneath the return to profitability, investors should be aware that mounting legal and regulatory scrutiny could still…

Read the full narrative on Zillow Group (it's free!)

Zillow Group's narrative projects $3.6 billion revenue and $415.2 million earnings by 2028.

Uncover how Zillow Group's forecasts yield a $85.54 fair value, a 98% upside to its current price.

Exploring Other Perspectives

Before this pullback, the most optimistic analysts were assuming revenue could reach about US$4.2 billion and earnings US$681 million, a far more upbeat scenario than the legal and regulatory risk case you just read, which shows how widely expectations can differ and why it is worth comparing several viewpoints that may be revised as these new cost pressures play through.

Explore 5 other fair value estimates on Zillow Group - why the stock might be worth 33% less than the current price!

Build Your Own Zillow Group Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Zillow Group research is our analysis highlighting 3 key rewards that could impact your investment decision.
• Our free Zillow Group research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Zillow Group's overall financial health at a glance.

Looking For Alternative Opportunities?

Don't miss your shot at the next 10-bagger. Our latest stock picks just dropped:

• Explore 23 top quantum computing companies leading the revolution in next-gen technology and shaping the future with breakthroughs in quantum algorithms, superconducting qubits, and cutting-edge research.
• Capitalize on the AI infrastructure supercycle with our selection of the 34 best 'picks and shovels' of the AI gold rush converting record-breaking demand into massive cash flow.
• We've uncovered the 13 dividend fortresses yielding 5%+ that don't just survive market storms, but thrive in them.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com