Zillow Feels a Lot Like Spotify Did in 2023
The market still isn't convinced, but the business is quietly improving.
$Zillow(Z)$ just delivered 18% revenue growth, despite one of the weakest U.S. housing markets in years.
The real story isn't home sales.
It's the ecosystem.
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Residential revenue: +7%
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Rentals: +31%
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Mortgages: +75%
Rentals are becoming Zillow's biggest growth engine, while its expanding mortgage business is strengthening customer lock-in. Together, they make the platform more valuable even when housing transactions remain sluggish.
Meanwhile, management has announced layoffs, suggesting operating leverage could improve as costs come down.
This setup feels familiar.
Back in 2023, many investors dismissed $Spotify Technology S.A.(SPOT)$ . The market focused on weak sentiment while overlooking improving margins, stronger execution, and the early signs of operating leverage.
Zillow could be following a similar path.
If U.S. housing activity eventually recovers and residential growth accelerates above 20%, today's business could look dramatically different from what the market is pricing in.
The question isn't whether housing is weak today.
It's whether Zillow is quietly building the dominant platform for when the cycle turns.
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