Zillow Group heads into its August earnings with shorts quietly covering, analysts divided on how much upside the housing recovery can deliver, and options positioning mildly more defensive than usual.
The most interesting dynamic this week is the divergence between a falling short position and a falling stock price. Short interest has dropped 14.5% over the past month, landing at 6.3% of free float — still meaningful, but the trend is clearly toward less conviction from the bear camp. The pace of covering has been steady rather than dramatic: from a peak near 3.66 million shares shorted in mid-June, the position has ground down to around 3.1 million. That unwinding has done little to buoy the share price, which slipped another 2.7% on the week to close at $31.80.
The lending market tells a comfortable story for shorts still in the trade. Borrow cost has eased to roughly 0.51% — low by any standard — and availability is running at 355%, meaning there are more than three-and-a-half shares available to borrow for every one already lent out. That is well above the 52-week tightest level of 284%, and it points to an open door for anyone wanting to add short exposure. Options positioning is slightly more cautious than recently: the put/call ratio is running at 1.22, a touch above its 20-day average of 1.10, though the z-score of 0.46 puts it far from alarming. The shift is worth noting — through mid-June the PCR sat below 0.70, and it has climbed steadily since. That said, positioning looks more cautious than charged.
The Street is clearly recalibrating expectations. Goldman Sachs trimmed its target to $40 in mid-June while holding Neutral — a notable step down from $53 that frames the risk squarely. Wells Fargo nudged its Equal-Weight target modestly higher to $46 last week, a gesture more than a conviction call. Earlier in the quarter, bulls at RBC and Citi also cut targets — RBC from $95 to $70, Citi from $78 to $68 — while keeping positive ratings intact. The consensus mean sits around $62.86, which is roughly double the current price of $31.80. That gap is striking, and it reflects the distance between where the Street thinks the stock can trade in a normalised housing environment and where the market is pricing it today. Valuation multiples give some grounding: the trailing P/E has compressed nearly two points over the past month to 12.2x, while EV/EBITDA has drifted down to 7.8x. The bull case rests on Zillow's integrated platform across rentals, buying, selling, and financing. The bear case centres on Google's expansion into listings, antitrust risk, and revenue saturation.
One institutional data point worth flagging: Capital Research added over 6.4 million shares in the most recent reporting period, lifting its stake to 7.6% of shares — the largest active manager move in the top-holder list. That is a meaningful accumulation in a stock trading well below where most analysts have their targets. BlackRock added a smaller position, while Vanguard's holding is unchanged. The founder presence — Richard Barton still holds 4.6% of shares — keeps insider alignment in view, though the most recent insider trades on record are from late 2024 and carry no current read-through.
Factor scores add nuance to the growth-versus-quality tension. EPS momentum is genuinely strong — 88th percentile over 90 days and 72nd over 30 — and the 12-month forward EPS year-on-year growth rank is in the 81st percentile. The EPS surprise score is weak at the 28th percentile, suggesting the beats have been modest when they come. The short score of 52.3 is mid-range and has been tracking sideways all month, with no spike in either direction. Earnings history offers a caution: after the May print the stock fell 11% over the following five days despite an in-line day-one reaction.
Q1 results are due August 5. With short covering slowing, a still-wide gap between the stock price and consensus targets, and a PCR that has drifted higher since mid-June, the shape of that print — and any guidance signal on housing transaction volumes — is the next real test of whether the covering trend has further to run.
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