Travis Hoium
Motley Fool Analyst, Author of Asymmetric Investing
Zillow's real lock-in is winning in rentals and mortgages, which the market does not see. As with Spotify in 2023, the stock is hated while the company outgrows its market, operating leverage kicks in and layoffs have been announced. If housing volume recovers and residential growth reaches 20%+, it becomes a rocket ship. x.comÂ
Zillow looks very cheap after a very strong quarter with 18% revenue growth in a flat-to-down housing market. It is now a top-25 home loan originator, and while its push into Preferred changes revenue recognition, it still expects strong profits and double-digit growth. x.comÂ
The market looks further ahead than today's weak housing conditions, so Rocket Companies and Zillow look bottomed. Both appear poised for big runs despite how bad the housing market remains. x.comÂ
Real estate stocks such as Rocket Companies, Zillow and Builders FirstSource will struggle to recover strongly until housing turnover increases. One possible offset: once rate hikes start, probably in September, 10- and 30-year Treasury yields and mortgage rates could tick down. x.comÂ
CoStar Group looks too cheap for its growth, expanding margins and network-effect assets. Its unique data network and marketplaces have durable network effects, and it could lead in agentic real-estate tech, with Homes AI an early look. If earnings compound over 20% organically for three years, below consensus, a high-teens to 20x 2027 P/E is probably too cheap. Q1 EBITDA more than doubled on lower personnel costs and AI efficiencies, and residential should turn profitable in Q2. x.com x.com … Show more
Opendoor's improving unit economics could create operating leverage when housing recovers. It could be one of 2026's most interesting speculative turnarounds. Q2 contribution profit rose 59% sequentially to $51 million, margin reached 4.8%, and profit per home sold rose about $5,000 to $22,000. It still has an adjusted EBITDA loss; mortgage rates, inventory and dilution threaten returns. The coming quarters must prove sustainable profits and shareholder value, not just volume. x.comÂ
Zillow is a Stage 4 stock in a clear downtrend, a reminder that a company can post decent numbers and still be a terrible stock. Rallies keep failing, and a recent bear flag preceded a 25% drop to new lows over six weeks. Housing stocks lack a favorable backdrop with mortgage rates above 6%. Down 67% from its highs, Zillow needs a 203% gain to break even, and laggards like this drag on performance. x.comÂ
Zillow is likely to fall further as home sales decline. The stock has already hit a 52-week low. x.comÂ
As the AI infrastructure crash takes form, its recessionary effect suppresses bond issuance and powerfully caps yields, giving battered housing, mortgage and related stocks a lift. Starwood Property Trust, Rocket Companies and Builders FirstSource should get a powerful boost as yields fall, with huge short covering and fundamental improvement; many in the group trade well below book value. x.com x.com x.comÂ
Opendoor could make a nice short-term swing trade on retail hype if it breaks its downtrend, though its long-term fundamentals are unconvincing. Retail speculators may pour back in once it moves, and some may buy it by mistake around the OpenAI IPO, as happened with Virgin Galactic before SpaceX's IPO. Fundamentally, mortgage rates likely need a serious cut for the business to accelerate. x.com x.com x.com x.comÂ
Opendoor's turnaround under CEO Kaz Nejatian is showing up in the numbers through its Opendoor 2.0 strategy of AI pricing and faster resales. Q4 revenue was $736M versus $595M expected, homes acquired rose 46% quarter over quarter, losses narrowed and inventory turns improved. Management guides to adjusted net income breakeven by 2026, and a new 4.99% fixed-rate mortgage program could attract buyers. x.com x.comÂ
