Zillow shares slid amid news Google is testing a new advertising format that could compete with the listings platform
Zillow Group Inc. shares fell 8.47% Monday, closing at $68.38, after news emerged that Google is testing a new real estate advertising format that could compete directly with the online property platform’s services.
The decline erased roughly $1.6 billion from Zillow’s market capitalization, which now stands at about $16.26 billion. Zillow was not alone in the downturn. CoStar Group, owner of Homes.com, dropped 6.4%, while Rocket, which acquired Redfin earlier this year, fell 2.8%.
Google’s new format
Google confirmed it is running an experiment in partnership with ComeHome by HouseCanary that displays property listings alongside existing real estate agent ads in search results. The test, currently limited to select markets including Denver, Los Angeles, Miami, and Houston, works only on mobile devices.
Real estate tech strategist Mike DelPrete first reported the development Friday on his blog, posting screenshots of the new format. The listings allow users to view property details, request tours, and contact agents directly through search results—features similar to those offered on Zillow’s platform.
“This is a small experiment in partnership with ComeHome by HouseCanary that displays property listings and information alongside existing real estate agent ads on Google Search,” a Google spokesperson told Barron’s.
The format includes filters for bedrooms, bathrooms, square footage, price, and listing status, Investing.com reported. A “Request a tour” button connects users with what Google describes as “top-rated” local agents, with an expected response time of 15 minutes.
Impact of changes
Wall Street analysts offered mixed assessments of the potential impact on Zillow.
Goldman Sachs analyst Michael Ng described the format as a long-term concern. “While we don’t expect a direct near-term impact on Zillow’s business, given that most of Zillow’s traffic is direct and Google’s new product is currently limited to select markets and mobile browsers, we view this development as a long-term risk for real estate portals like Zillow,” Ng wrote in a client note. He maintains a neutral rating on the stock.
Wells Fargo analyst Alec Brondolo, who holds an equal-weight rating on Zillow, said he would not expect a significant financial impact from listings on Google shifting from organic to paid, noting Zillow’s limited dependence on organic search traffic.
KBW analyst Ryan Tomasello noted that “the possibility of Google entering the property listings category has long been viewed as a tail risk for the property portals and other relevant real estate industry players.”
Zillow reported 228 million visitors to its platform in the third quarter, according to CNBC. The company’s shares are down more than 8% year to date.
