Zillow’s ZG stock was under pressure on Monday, falling 8% as reports emerged that Alphabet GOOGL is testing real estate listings in its Google search results.
Although a test, Google has displayed home listings that include complete property detail pages, as well as options to contact agents and request tours of the homes in a limited number of markets, and only on mobile devices.
If it were anyone else, the market’s reaction to potential disruption fears that Zillow could face from an inspiring competitor may have been brushed off. However, Alphabet is arguably the most innovative and diversified tech company in the world with an expansive reach and resources that even has its subsidiary Waymo ahead of Tesla TSLA regarding the robotaxi market and autonomous vehicle production.
Considering Alphabet didn’t make an official announcement on any expansion efforts into real-estate related ventures, GOOGL was virtually unresponsive to the news, ending the day very slightly down at -0.35%.
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Of course, the comparison to a multi-billion-dollar tech conglomerate like Alphabet isn’t fair, with the Google parent company on track to hit new revenue peaks in contrast to Zillow. Keeping in mind that the housing market can be very cyclical, Zillow has experienced a drop-off from its annual sales peak of $8.14 billion in 2021, which stemmed from pent-up demand following the pandemic.
Still, Zillow’s sales are expected to rise 15% this year and are projected to rebound another 14% in fiscal 2026 to $2.94 billion. That said, the cyclicality of the housing market would obviously make Alphabet stock a more enticing option than Zillow in terms of risk aversion.
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Most important to showing improved profitability and the likelihood of more upside in a stock is the trend of earnings estimate revisions (EPS). Optimistically, EPS revisions have rebounded swiftly for Zillow over the last 30 days, although FY26 estimates are still slightly down in the last two months. Becoming profitable in recent years, Zillow’s annual earnings are now expected to increase 21% in FY25 to $1.67 per share, with FY26 EPS projected to climb another 31% to $2.19.
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As for Alphabet, FY25 and FY26 EPS estimates are up 5% and 3% in the last 60 days, respectively. Alphabet’s EPS is currently expected to increase 31% this year and is projected to rise another 4% in FY26 to $10.95.
