ZG cleared its June 2 earnings hurdle with barely a stumble, yet short sellers have already started rebuilding — and the Street's target cuts from last month still leave the stock trading at less than 60 cents on the dollar relative to consensus.
The pre-earnings short buildup documented here last week has partially unwound, but the relief was brief. Short interest pulled back from the 9.2% of free float flagged on May 27 and now stands at 7.4% — still up 7% on the week and 25.5% over the past month. The direction of travel from mid-April remains intact: shorts dipped around the print and are rebuilding again. The lending market is not generating squeeze pressure. Availability is running at 307% — roughly three shares available for every one borrowed — and the cost to borrow is just 0.52%, down 13% on the week. That combination describes a borrow market that is well-supplied and cheap: shorts face no friction in adding to positions. The ORTEX short score has edged higher to 56.5, its highest reading of the trailing two weeks, consistent with the gradual re-accumulation pattern.
Options positioning is mildly cautious but not alarmed. The put/call ratio at 0.73 is running above its 20-day average of 0.69, though the z-score of 0.93 is well short of the defensive extremes seen earlier in the year. What is striking is the directional shift in the PCR over the past six weeks: it was below 0.45 in late April, climbed steadily through May, and has now plateaued just above 0.73. Options traders moved from net bullish ahead of earnings to modestly hedged, and they have stayed there.
The Street's reaction to the May 6 Q1 print tells much of the story on sentiment. A near-sweep of analysts trimmed targets in the days after results — Citigroup cut from $78 to $68, Wells Fargo from $60 to $45, Piper Sandler from $70 to $55, Mizuho from $65 to $53, and several others in the same direction — while keeping positive or neutral ratings in place. Only RBC Capital held its $95 target and Outperform rating unchanged, reiterating that view again on May 21. The consensus has settled at a Hold with a mean target of $65.27, implying roughly 78% upside from the current $36.58 close. A gap that wide between price and consensus usually signals either a contrarian recovery story or a target structure that has not fully adjusted to the new trading range. At 14x trailing earnings and 9x EV/EBITDA, valuation is not egregiously stretched in absolute terms — the P/E multiple has compressed by nearly four points over the past month — but the EPS surprise factor score of 28 suggests Zillow has not been a consistent beat-and-raise name.
Institutional ownership adds one layer of interest. Capital Research added over 6.4 million shares through April, and Independent Franchise Partners added nearly 3 million. Tiger Global lifted its position by 1.3 million shares. These are not passive index flows — they represent active managers adding at prices materially above where the stock trades now, which sets up a useful tension against the short-side conviction.
The stock gained just 1% on the week and 0.4% on the day after earnings — a reaction that the May 6 print also mirrored (flat on the day, down 11% over the following five sessions). Close peers JLL and CBRE both gained on the day, up 3.9% and 2.6% respectively, while CSGP slipped 0.6%. The next earnings event is not until August 5, leaving two months of positioning to watch — and the question of whether the short re-accumulation continues at the same pace it ran through May.
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