Zillow Group, Inc. operates real estate brands in mobile applications and Websites in the United States. The company offers premier agent and rentals marketplaces, new construction marketplaces, advertising, display advertising, and business technology solutions, as well as dotloop and floor plans. It also provides mortgage originations and the sale of mortgages, and advertising to mortgage lenders and other mortgage professionals; and title and escrow services. In addition, the company's brand portfolio includes Zillow Premier Agent, Zillow Home Loans, Zillow Rentals, Trulia, StreetEasy, HotPads, and Out East; and a suite of marketing software and technology solutions for the real estate industry, including ShowingTime+, Spruce, and Follow Up Boss. Zillow Group, Inc. was incorporated in 2004 and is headquartered in Seattle, Washington.

Zillow looks like a company that has already turned profitable, but it has not yet earned a premium valuation on business quality. Revenue for TTM rose to $708 million, and gross profit and EBITDA also improved, which points to a recovery in the operating base. At the same time, net income is only $46 million, net profit margin is 2.27%, and operating margin is 0.41% — that is a very thin margin of safety for a highly competitive business. P/S at 3.03 looks moderate, even slightly below the industry median, but P/E of 165.56, P/B of 2.21, and P/FCF of 24.15 remain elevated and suggest that the market is already pricing in a meaningful improvement. The P/E dynamic is especially concerning: it has fallen sharply from extreme levels, but it still reflects a weak earnings base and high valuation sensitivity to any pullback in results. Return on capital and assets remains low relative to the industry: ROE of 1.28%, ROA of 1.11%, and return on tangible equity of 3.68% do not confirm strong capital efficiency. On the other hand, leverage looks comfortable: debt/equity is zero, long-term debt is low, and the current ratio of 2.29 indicates acceptable liquidity. However, the quick ratio is zero, and cash has declined to $788 million from higher levels previously, which adds caution to the assessment of short-term resilience. Equity remains substantial at $4.41 billion, supporting the balance sheet, but the trend in net worth and cash on hand over recent periods is rather downward. There are no dividends, so investors do not receive compensation for waiting through cash flow. Overall, fundamentals have improved compared with a year ago, but earnings quality and profitability are still weak, so the target forecast should be lowered slightly, while maintaining a conservative view on overvaluation based on earnings and cash flow.

Zillow Group, Inc.

Сильный индекс, значительно упал. Быки в растерянности.

Strong index, significantly down. The bulls are confused.

Сильный индекс, значительно вырос. Рынок на стороне быков.

Strong index, significantly up. The market is on the bulls' side.

Сильный индекс, значительно вырос. Приток средств в лонги на высоком уровне.

Strong index, significantly up. Inflow of funds into longs at a high level.

Zillow improved revenue and profitability, but low margins and high P/E, P/B, and P/FCF do not justify an aggressive valuation.

Key Points
Housing demand is weighed down by both high interest rates and home prices relative to household income.
Housing supply is low because new construction isn’t making up for the shortfall in sales of existing homes.
Companies with exposure to the housing market offer an alternative way to benefit from an eventual recovery.
Zillow (NASDAQ: ZG) (NASDAQ: Z) stock is hovering around a three-year low. This follows the company's delivery of weak guidance with a forecast for a flat housing market in the second half of the year, even when factoring in a slower-than-expected start to the year.
Here's a look at why the housing market is under pressure, and at three stocks that can reward patient investors.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
The housing-market glut
The housing market is a textbook example of supply and demand. Supply is influenced by housing availability, from existing homes and new builds, which are impacted by zoning and tax laws. Demand fluctuates based on interest rates, lending options, employment, and housing prices relative to the median household income.
Housing prices surged early in the pandemic as 30-year mortgage interest rates fell to multi-decade lows. But those prices have stayed high even as mortgage rates have climbed far above pre-pandemic levels:
The Case-Shiller U.S. National Home Price Index tracks changes in the value of single-family U.S. homes, similar to how stock market indexes like the S&P 500 and the Dow Jones Industrial Average measure changes in a basket of stocks. As you can see in the above chart, the Case-Shiller index and the median sales price of an existing U.S. home surged in the early 2000s, then pulled back during the Great Recession, but both have rapidly recovered over the last 15 years.
However, housing affordability is now at multi-decade lows, because housing prices have risen significantly faster than household incomes. A value of 100 on the Fixed Housing Affordability Index means that a family with a median household income can qualify for a mortgage on a median home price with a 20% down payment. Historically, the vast majority of households could qualify, but the value fell below 100 in recent years:
The index would likely be even lower if it focused only on potential first-time homebuyers, as it's somewhat inflated by including existing homeowners, who tend to have higher down payments.
Aside from lowering mortgage interest rates and raising household incomes, another way to make housing more affordable is to increase supply. But as you can see in the following chart, U.S housing starts have flatlined while U.S. existing home sales are near multi-decade lows:
This means that developers aren't building new units fast enough, and existing homeowners aren't rushing to sell their homes, which reduces supply. Throw in the inflationary pressure of higher oil prices, and it's understandable that housing demand remains constrained.
The growth play
Zillow thrives when homes are rapidly changing hands in a hot housing market. But it's proving that it can still generate strong results even during a slowdown.
The company has a highly valuable database that connects real estate professionals, buyers, sellers, and renters. It sells software, tools, and advertising options to industry professionals, agents, and property management companies looking to reach potential customers. Zillow Home Loans offers financing for home purchases.
However, traffic to Zillow's mobile apps and site was down 3% year over year in its latest quarter. Since the platform is free, Zillow still has a massive user base, with 220 million average monthly unique users. Despite the slower traffic, revenue jumped 18%, and the company is now consistently profitable.
For long-term investors looking for a growth stock poised to recover in lockstep with the housing market, Zillow looks like a great buy.
The income and value play
Home Depot (NYSE: HD) is the largest home-improvement retailer in the world. But because it operates exclusively in the U.S., Canada, and Mexico (with the vast majority of its business in the U.S.), the company is extremely sensitive to consumer spending and the U.S. housing market.
When interest rates are low and household incomes are rising, folks may be more inclined to improve their existing home or to buy a home that needs improvements. Home Depot has been in a multiyear slowdown because its customers are putting off big-ticket home improvement projects.
In the latest quarter, the average ticket rose 2.2% while overall transaction volume fell 1.3%. Home Depot's operating margins have been ticking down, and revenue is growing at a relatively low rate.
However, Home Depot is a coiled spring for a recovery in the housing market, because the company continues to build new stores, reinnovate existing stores, and expand its contractor business to diversify its revenue stream.
Home Depot also has a history of 18 consecutive years of dividend raises, and currently yields a sizable 3%. That makes it a top choice for dividend stock investors.
The balanced play
You may be familiar with Sherwin-Williams (NYSE: SHW) through either its own stores or its channel partners like Lowe's Companies that sell Sherwin-Williams-branded products. You might also know its other company-owned brands, such as Valspar paints and coatings, Cabot wood care and stain products, or Krylon spray paint. Sherwin-Williams also has a sizable performance coatings division, which made up 29% of 2025 sales.
A good chunk of its retail business is commercial and industrial -- not residential. It also has a significant international segment, making it less dependent on U.S consumers.
As a result, Sherwin-Williams has been less affected by the housing-market slowdown than Zillow and Home Depot, with strong margins and all-time-high sales. Its growth has allowed it to steadily repurchase a ton of stock and boost its dividend for 47 consecutive years, including some massive raises that have nearly tripled the dividend over the last decade:
Sherwin-Williams does have a premium valuation compared to Home Depot, and a far lower yield at just 1%. But for investors looking for a stock that benefits from a strong housing market, it's a solid buy, and it's less of a pure play than Zillow and Home Depot.
Should you buy stock in Zillow Group right now?
Before you buy stock in Zillow Group, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Zillow Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $465,733!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,313,467!*
Now, it’s worth noting Stock Advisor’s total average return is 985% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of May 29, 2026.
Daniel Foelber has positions in Home Depot. The Motley Fool has positions in and recommends Home Depot and Zillow Group. The Motley Fool recommends Lowe's Companies and Sherwin-Williams. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Zillow Just Painted a Grim Outlook for the Housing Market. Here Are 3 Beaten-Down Stocks to Buy Anyway.

Zillow Group, Inc. ZG reported strong first-quarter 2026 results, with both adjusted earnings and revenues surpassing the Zacks Consensus Estimate.
The company reported an 18% year-over-year increase in total revenues, mainly driven by growth in the mortgages segment due to higher loan origination activity, with significant increases in rental revenues, especially from multifamily listings, and continued momentum in its residential and agent-focused services.
Net Income
On a GAAP basis, the company reported a net income of $46 million or 19 cents per share compared with $8 million or 3 cents per share in the year-ago quarter. Solid top-line growth primarily boosted the net income.
Non-GAAP net income in the reported quarter was $129 million or 53 cents per share compared with $105 million or 41 cents per share in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 10 cents.
Zillow Group, Inc. Price, Consensus and EPS Surprise
Revenues
Quarterly revenues increased to $708 million from $598 million in the year-ago quarter. Healthy growth in all segments boosted the top line. The top line beat the Zacks Consensus Estimate of $704.3 million.
Residential revenues increased 8% to $450 million, backed by growth in Zillow Preferred, driven by expanded connections through Enhanced Markets and strong conversion rates for Preferred partners. Zillow Showcase and new construction also contributed to the growth.
The Mortgages segment generated $64 million in revenues compared with $41 million in the year-earlier quarter, mainly due to 96% growth in purchase loan origination as the company’s mortgage strategy is encouraging more buyers to use Zillow Home Loans.
Rental revenues rose 42% to $183 million, primarily driven by 57% increase in multifamily revenues.
Other Details
During the quarter, the company recorded a gross profit of $519 million compared with $459 million in the prior-year quarter, with respective margins of 73% and 77%. The operating expenses during the quarter were $483 million, up from $468 million in the prior-year quarter.
Adjusted EBITDA was $182 million compared with $153 million a year ago, with respective margins of 26% each.
Cash Flow & Liquidity
In the first quarter, Zillow generated $200 million in cash from operations compared with $104 million in the year-earlier quarter. As of March 31, 2026, it had $678 million in cash and cash equivalents, with $80 million of lease liabilities (net of current portion).
For the second quarter of 2026, Zillow expects total revenues in the range of $750-$765 million. Total adjusted EBITDA is expected in the band of $150 million to $165 million. Management expects Mortgages’ revenues to grow at similar levels to the first quarter. Residential revenues are projected to grow in the mid-single-digits year over year, while rental revenues are expected to grow approximately 30% year over year.
For 2026, the company expects mid-teens revenue growth, with rental revenues up approximately 30% year over year.
Zacks Rank
Zillow currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Upcoming Releases
Keysight Technologies, Inc. KEYS is scheduled to release second-quarter fiscal 2026 earnings on May 19. The Zacks Consensus Estimate for earnings is pegged at $2.33 per share, suggesting growth of 37.06% from the year-ago reported figure.
Keysight has a long-term earnings growth expectation of 17.45%. The company delivered an average earnings surprise of 4.58% in the last four reported quarters.
Workday, Inc. WDAY is set to release first-quarter fiscal 2027 earnings on May 21. The Zacks Consensus Estimate for earnings is pegged at $2.49 per share, implying growth of 11.7% from the year-ago reported figure.
Workday has a long-term earnings growth expectation of 20.16%. The company delivered an average earnings surprise of 8.53% in the last four reported quarters.
Analog Devices, Inc. ADI is set to release second-quarter fiscal 2026 earnings on May 20. The Zacks Consensus Estimate for earnings is pegged at $2.88 per share, implying growth of 55.7% from the year-ago reported figure.
Analog Devices has a long-term earnings growth expectation of 21.89%. The company delivered an average earnings surprise of 6.11% in the last four reported quarters.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
See Stocks Now >>
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Zillow's Q1 Earnings Beat Estimates on Solid Y/Y Revenue Growth

(RTTNews) - Zillow Group Inc. (Z) released earnings for its first quarter that Increases, from last year
The company's earnings totaled $46 million, or $0.19 per share. This compares with $8 million, or $0.03 per share, last year.
Excluding items, Zillow Group Inc. reported adjusted earnings of $129 million or $0.53 per share for the period.
The company's revenue for the period rose 18.4% to $708 million from $598 million last year.
Zillow Group Inc. earnings at a glance (GAAP) :
-Earnings: $46 Mln. vs. $8 Mln. last year. -EPS: $0.19 vs. $0.03 last year. -Revenue: $708 Mln vs. $598 Mln last year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Zillow Group Inc. Q1 Profit Climbs

Key Points
Nvidia is the fastest grower among the Mag 7, but also the one with the lowest 2027 earnings multiple.
Reddit revenue is accelerating even as its stock has been cut in half over the past seven months.
Zillow is posting double-digit revenue growth with the real estate market up on blocks. Things should get materially better when the housing industry improves.
Last month was rough for growth investors. I decided to make the most of the downturn, initiating positions in three companies that I feel have fallen to attractive entry points.
I bought shares of Nvidia (NASDAQ: NVDA), Reddit (NYSE: RDDT), and Zillow (NASDAQ: Z) (NASDAQ: ZG) in March. The stocks are currently trading 16%, 52%, and 55% below their 52-week highs. Is that opportunity knocking or the grim reaper of bad decisions? Let's take a closer look.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
1. Nvidia
I've been a fan of Nvidia for more than two decades, dating back to its days as a pioneer in unlocking the power of PC gaming with its GPUs. Obviously, I should've bought sooner. Even with the recent artificial intelligence (AI) boom -- with the most valuable company's revenue more than doubling in back-to-back fiscal years before decelerating to a still-impressive 66% -- Nvidia stock is a six-bagger in the last three years.
Nvidia is still going strong. Revenue soared 73% in its latest quarter. You have to go back more than a year to find Nvidia growing faster, and these results are depressed given the trade restrictions in China and recent geopolitical headwinds.
Some of the more common knocks on chip makers is that they are cyclical and toil away in a cutthroat low-margin business. This doesn't come close to describing Nvidia. It has posted annual revenue growth of 53% or better in 5 of the last 6 fiscal years. Its net margin is up to a blistering 56%, more than quadrupling from where it was a decade ago.
Another misperception worth debunking is that Nvidia has to be expensive as the only U.S.-listed stock with a market cap north of $4 trillion. Well, you can buy the stock for 21 this new fiscal year's earnings and less than 16 times next year's analyst profit target. Do you know how many of the Magnificent Seven stocks trade at a lower 2027 earnings multiple? None. Do you know how many of the Mag 7 names are currently growing faster? None.
There are two potential potholes to watch. A net margin of 56% is incredible, but it's probably not sustainable for long with several deep-pocketed companies trying to cash in on ascending demand for AI chips. The other thing to watch is any of its distant rivals closing the gap, if not overtaking Nvidia. A better mousetrap is a disruptor's killjoy.
2. Reddit
Like many high-octane growth stocks in the current climate, the correction has been swift for cloud-based platforms in an evolving AI world. Reddit has surrendered nearly half of its value since its January peak and more than half of its peak value set in the fall of last year.
I get why some premium subscription-based enterprises and to a lesser extent consumer-facing platforms are feeling the burn, but that's not Reddit at all. The community of communities is on a roll in the new normal. It now has a couple of the leading AI players paying Reddit to sift through its perpetually growing and well-regarded user-created forum content. Reddit is also doing a stellar job of monetizing its growing fan base.
Reddit enters this year with 121.4 million daily active unique users, a 19% increase over the past year. Revenue shot 70% higher in its latest quarter, on the strength of keeping its platform free for the vast majority of its users through stronger sponsored interest in reaching Redditors and other regulars.
Free cash flow has tripled over the past year. Earnings have doubled. You can buy Reddit for 33 times forward earnings and 24 times next year's Wall Street profit consensus. It's a healthy discount to its actual growth rate, and Reddit has beaten analyst quarterly profit targets by at least 33% for more than a year. Bet on the beaters.
One potential pothole worth monitoring is still AI. They are paying Reddit now, but you're also seeing search engines lean more on AI to condense Reddit responses rather than sending users to the popular forum itself.
3. Zillow Group
This is probably the riskiest of my three purchases, largely because its turnaround potential is at the mercy of macro forces beyond its control. Zillow is the leading real estate portal. It's the first stop for many folks looking to buy or sell a home. It has become a force in the rental and mortgage financing markets. If you're a real estate agent, property manager, homebuilder, or even real estate photographer, you're going to want to pay Zillow for leads.
The bearish narrative has been an open house for years. High mortgage rates are keeping sellers from listing their properties, and the recent inflationary and economic concerns are only making things worse. U.S. existing home sales were flat in 2024 and 2025, at a 30-year low, with barely 4 million properties changing hands.
Somehow, in this dreary climate, Zillow has managed to grow its revenue by 15% to 16% in each of the last two years. Analysts see a three-peat in 2026. You can buy Zillow for 18 times this year's net income and 14 times next year's estimate.
The pothole here -- let's roll with the theme and call it a potential crack in the foundation -- is that there are fates worse than stagnancy. The real estate market can get worse. Home affordability and the financial health of prospective buyers can remain glue traps. I don't mind being early to a showing, but this turnaround has taken years just to bottom out.
Should you buy stock in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $532,066!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,087,496!*
Now, it’s worth noting Stock Advisor’s total average return is 926% — a market-crushing outperformance compared to 185% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of April 6, 2026.
Rick Munarriz has positions in Nvidia, Reddit, and Zillow Group. The Motley Fool has positions in and recommends Nvidia and Zillow Group. The Motley Fool recommends Reddit. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

3 Unstoppable Stocks I Bought Last Month

Key Points
Opendoor Technologies buys houses and attempts to flip them for a profit, which is typically a very risky business model.
The company lost $1.3 billion during 2025, as tough conditions in the housing market made it difficult to achieve favorable prices.
Opendoor stock is down 53% from its 52-week high, and further downside might be the path of least resistance.
Opendoor Technologies (NASDAQ: OPEN) stock hit an all-time low of $0.51 in June last year, before staging an incredible rally that peaked at $10.87 in September. But the rally wasn't driven by the company's fundamentals -- instead, the gains were fueled by retail investors who whipped up a buying frenzy in the stock using social media platforms like X (formerly Twitter) and Reddit.
The stock has since settled at $5.08, and this renewed downtrend looks like it might have legs. Opendoor hired a new chief executive officer (CEO) last year who is trying to revive the company's languishing financial results, but he is aggressively pursuing a strategy that history suggests might not work.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Therefore, could Opendoor stock head back to its record low of $0.51? Read on.
A concerning track record
Opendoor buys homes and attempts to flip them for a profit. The company entices vendors by giving them a guaranteed price and a quick closing period of around two weeks. This is more convenient than selling through a real estate agent, which is expensive and can sometimes take months with no guarantee of success.
This business model is very fruitful when the real estate market is steadily trending higher, but it can result in substantial losses when housing takes a negative turn, because Opendoor often holds thousands of properties in its inventory.
Competitors like Zillow Group and Redfin learned this the hard way. Both companies shut down their direct buying businesses after the 2021 housing boom ran out of steam. It was a matter of survival in Zillow's case, because its direct buying business was losing so much money that it threatened to take down the entire company.
Opendoor has weathered the peaks and troughs of the real estate market so far, but it has never actually turned a real annual profit (on the basis of generally accepted accounting principles). In fact, it lost a whopping $1.3 billion during 2025, which was a staggering 231% increase from its loss in the previous year.
A not-so-new strategy
Opendoor sold 11,791 homes during 2025 and purchased 8,241 more. Management deliberately acquired fewer homes because of the challenging housing market, with U.S. existing home sales hovering near the lowest level in five years. Plus, according to Redfin, there were 600,314 more sellers than buyers in the real estate market last month, which makes it very hard for companies like Opendoor to move significant volume at favorable prices.
These challenges persist despite the U.S. Federal Reserve cutting interest rates six times since September 2024.
But the tough conditions haven't deterred Opendoor's new CEO, Kaz Nejatian, who was appointed in September. He previously held leadership roles at PayPal, Shopify, and LinkedIn, so he has a strong background in technology. He thinks Opendoor should be buying more homes right now, not fewer, and he wants to use artificial intelligence to streamline the process and flip each property more quickly.
Nejatian believes boosting volume will give Opendoor more market share, and thus more control over prices. Plus, because it flips homes quickly, their value is less influenced by changes in the broader real estate market. This will reduce the company's exposure to steep losses when house prices fall.
It will take several quarters to determine whether this strategy will work, but I'm not convinced it will turn the company's fortunes around. After all, Zillow was a very high-volume participant in the direct buying industry, and it still couldn't make the numbers work. This business model comes with enormous costs and razor-thin gross profit margins, so there is simply no room for error.
More downside ahead?
Opendoor stock is already down by 53% from last year's peak, and I think the slide will continue. Retail investors have used social media to trigger buying frenzies in many other stocks in the past, with GameStop and AMC being two of the most prominent examples. Most of them have shaky fundamentals, so they never hold their gains, and they typically go on to lose most of their value.
If Opendoor's strategy shift doesn't bear fruit over the next few quarters, I think its stock will continue trending toward its all-time low of $0.51, representing a further potential downside of 90% from here.
Should you buy stock in Opendoor Technologies right now?
Before you buy stock in Opendoor Technologies, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Opendoor Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $508,607!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,122,746!*
Now, it’s worth noting Stock Advisor’s total average return is 933% — a market-crushing outperformance compared to 188% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of March 14, 2026.
Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends PayPal, Shopify, and Zillow Group. The Motley Fool recommends Reddit and recommends the following options: long January 2027 $42.50 calls on PayPal and short March 2026 $65 calls on PayPal. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

How Much Lower Can Opendoor Technologies Stock Go?

What Matters About Market History, and the Worldwide Bull Market

Are Unity and Zillow Resilient Brands?

Key Points
Software stocks have plunged this year on fears of AI disruption.
Block seemed to confirm those fears by announcing mass layoffs as it pivoted AI.
Software stocks fell on the news, but it's likely to encourage more layoffs.
The news out of Block (NYSE: XYZ) on Thursday night sent shockwaves through the tech industry.
The Jack Dorsey-run fintech company said it would lay off more than 40% of its employees, citing gains from artificial intelligence (AI). Dorsey said, "The core thesis is simple. Intelligence tools have changed what it means to build and run a company. A significantly smaller team, using the tools we're building, can do more and do it better."
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Some investors balked at the move, noting that Block had ramped up its headcount during the pandemic and has been bloated since. However, software stocks fell on the news as it seemed to reflect the same fears in the Citrini Research blog post that shook the market on Monday.
Layoffs aren't out of the ordinary for any company, but cutting 40% of your workforce is virtually unheard of.
The iShares Expanded Tech-Software ETF lost 1.3% in response to Block's announcement and was down as much as 3% on Friday. However, Block stock soared, finishing the day up 16.8%, after trading more than 20% higher.
Plenty of tech CEOs noticed Block's surge, and it shows that investors seem to be hungry for layoffs in the sector, especially as stock prices have plunged.
Let's take a look at a few other stocks that could be next up to issue layoffs.
1. IBM
IBM (NYSE: IBM) isn't a pure-play software-as-a-service (SaaS) company as it has a large consulting business, but software does make up a significant part of the business, and the company has been touting its shift to a slimmer, more asset-light, tech-forward business for some time.
The company was also early to AI with Watson, though it has relatively little to show for it since then. IBM did report its first quarter of double-digit revenue growth in more than a decade in Q4, showing the business is gaining traction in areas like software.
With the stock down nearly 25% in just a month, investors may be fretting about AI disruption. IBM generates just $240,000 in revenue per employee, well below that of nearly every other tech stock. A round of layoffs from IBM would likely be well-received by the market.
2. DocuSign
Like Block, DocuSign (NASDAQ: DOCU) also went on a growth and spending binge during the pandemic and hasn't really recovered.
The stock is still down more than 80% from its peak during the pandemic, and it's gotten caught up in the recent software sell-off as it's down more than 34% this year.
DocuSign earns $450,000 in revenue per employee, and like Block, it seems like it could benefit from embracing AI tools. Layoffs would likely give the stock a boost.
3. Zillow
Zillow (NASDAQ: Z) (NASDAQ: ZG) is not a traditional software-as-a-service stock either, but the company also shows signs of bloat after expanding during the real estate boom during the pandemic.
Like its peers, the stock has also tumbled lately, and is down 35% year-to-date. Zillow currently brings in $350,000 in revenue per employee, meaning it could expand its margins with a round of layoffs.
Why it matters for investors
Block's move made it clear to software companies that investors are likely to reward them for cutting their workforce, and AI provides cover, if not justification, for doing so.
Software companies also spend nearly all of their revenue on employees, meaning there's significant leverage to be gained from layoffs.
For investors, a wave of layoffs is likely to be a good thing, and layoffs among big tech companies at the end of 2022 and the beginning of 2023 helped spark a recovery in tech stocks.
Block may be the first of the AI era to do mass layoffs, but it won't be the last.
Should you buy stock in Block right now?
Before you buy stock in Block, consider this:
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Block, Docusign, International Business Machines, and Zillow Group. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

After Block's Layoffs, Could These 3 Companies Be Next?

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For the quarter ended December 2025, Zillow Group (ZG) reported revenue of $654 million, up 18.1% over the same period last year. EPS came in at $0.39, compared to $0.27 in the year-ago quarter.
The reported revenue compares to the Zacks Consensus Estimate of $649.76 million, representing a surprise of +0.65%. The company delivered an EPS surprise of -6.25%, with the consensus EPS estimate being $0.42.
While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health.
As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately.
Here is how Zillow performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:
Mobile Applications and Websites - Average Monthly Unique Users: 221 million versus 215.1 million estimated by three analysts on average.
Mobile Applications and Websites - Visits: 2.1 billion versus the three-analyst average estimate of 2.11 billion.
Revenue- Residential: $418 million compared to the $415.98 million average estimate based on four analysts. The reported number represents a change of +8% year over year.
Revenue- Other: $11 million versus the four-analyst average estimate of $11.62 million. The reported number represents a year-over-year change of +10%.
Revenue- Mortgages: $57 million versus the four-analyst average estimate of $50.89 million. The reported number represents a year-over-year change of +39%.
Revenue- Rentals: $168 million versus $172.17 million estimated by four analysts on average. Compared to the year-ago quarter, this number represents a +44.8% change.
Shares of Zillow have returned -19.7% over the past month versus the Zacks S&P 500 composite's no change. The stock currently has a Zacks Rank #4 (Sell), indicating that it could underperform the broader market in the near term.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Periodand min./max. price, $	Price change, %		Volatility, %		Volume, $
Periodand min./max. price, $	ZG	Industry	ZG	Industry	Volume, $
Yesterday 29.4 - 31.2	-5.75	2.09	8.59	1.05	22.69M
Week 29.4 - 34.2	-13.20	4.59	5.06	2.21	103.18M
Month 29.2 - 34.5	0.52	3.34	12.91	3.33	431.14M
3 Months 29.0 - 46.4	-35.72	2.91	20.62	8.30	1.72B
6 Months 29.0 - 69.3	-56.44	1.52	28.08	11.23	3.85B
Year 29.0 - 90.2	-62.15	3.98	45.67	22.07	7.61B
3 years 29.0 - 90.2	-44.10	0.54	81.95	44.42	16.50B
5 years 26.2 - 114.1	-74.04	9.42	118.14	71.80	29.04B
All time 6.6 - 212.4	373.38	69.21	—	—	33.87B

Zillow Group, Inc.

Price and volatility history

Risk ratios