Zillow Group: A Contrarian Play Amid Insider Sales and Institutional Buying

In a market teetering between optimism and caution, Zillow Group (NASDAQ: Z) presents a compelling paradox: significant insider selling contrasts sharply with bold institutional buying. This tension creates a classic contrarian investing scenario—one where fear of short-term volatility might be masking long-term opportunity. Let’s dissect the data to uncover whether Zillow’s fundamentals justify buying now, even as insiders divest.

The Insider Selling Narrative: Cause for Concern or a Routine Exit?

Recent filings reveal that Zillow’s officer Jennifer Rock sold $408,152 worth of shares in May 2025, following two prior sales in February totaling $597,077. While insider selling often spooks investors, context is critical here. The shares sold were part of restricted stock lapses from equity compensation, a common practice for executives to monetize vested holdings.

The Form 144 filing detailing the May sale explicitly states Rock had no undisclosed material adverse information about Zillow’s operations. This suggests the sales were likely strategic, not a signal of impending doom. In fact, the timing aligns with typical vesting schedules, not panic.

Institutional Buying Surge: A Vote of Confidence in Long-Term Value

While insiders trim their stakes, institutional investors are doubling down. FORA Capital LLC dramatically increased its holdings by 278.5% in Q4 2024, boosting its stake to 16,144 shares—a bold move valuing the position at $1.195 million. Other institutions, including Charles Schwab Investment Management and Proficio Capital Partners, also expanded their stakes, collectively owning 71.01% of Zillow’s shares by year-end.

This influx underscores a belief in Zillow’s strategic dominance in real estate tech. The company’s platforms—spanning home valuations, mortgage services, and rental listings—remain unmatched, despite macroeconomic headwinds like housing affordability challenges.

The chart will likely show volatility, reflecting near-term uncertainty, but also dips to levels below analyst targets—a potential buying opportunity.

Fundamental Valuation: A Bargain at These Levels?

Zillow’s metrics scream undervaluation:
- Price-to-Earnings (P/E) Ratio: -144.53 (due to a Q4 net loss of $0.22/share).
- Graham Value Ratio: 1.2, indicating the stock trades at a 20% discount to its intrinsic value (based on earnings and book value).

While the negative P/E reflects recent losses, analysts project a rebound, forecasting a $0.32 EPS for fiscal 2025. If achieved, this would push the forward P/E to around 39x, still reasonable for a tech disruptor.

Meanwhile, the average analyst price target of $83.71 is 28% above Zillow’s current price (assuming a mid-May 2025 valuation). This gap suggests the market underappreciates Zillow’s long-term potential in a consolidating real estate tech sector.

This comparison would highlight Z’s undervaluation relative to competitors like Redfin or Realtor.com.

Analyst Sentiment and Strategic Positioning

Despite mixed sentiment—marked by a “Moderate Buy” rating—analysts highlight Zillow’s unrivaled scale. Its AI-driven tools, such as Zestimate, and its vertical integration into mortgages and rentals create a moat against competitors.

Even amid affordability challenges, Zillow’s recurring revenue streams (e.g., subscription-based services) and data-driven insights position it to capitalize on eventual housing recovery. The institutional buying surge aligns with this thesis, signaling confidence that Zillow’s leadership can navigate cyclical dips.

The Contrarian Case for Action Now

The tension between insider sales and institutional buying is classic contrarian material. Here’s why investors should lean into Zillow:
1. Insider Sales Are Not Necessarily Bearish: Executives often sell to diversify wealth, not because they doubt the business.
2. Institutional Support Signals Conviction: A 278.5% stake increase by FORA isn’t a fluke—it’s a bet on Zillow’s market dominance.
3. Valuation Metrics Are Compelling: At a 20% discount to its Graham value and with a $83.71 target, the upside outweighs near-term risks.
4. The Housing Tech Play Is Unstoppable: As the sector consolidates, Zillow’s platform advantage will compound its growth.

Final Verdict: Buy Zillow Now

Zillow Group is a rare opportunity to buy a tech leader at a discount. While insiders may be trimming stakes for personal reasons, institutions are piling in—smart money rarely gets this out of sync with the crowd. With a 28% upside to analyst targets and a business model primed for recovery, investors who ignore the noise and focus on fundamentals can position themselves for significant gains.

Action Item: Consider initiating a position in Zillow at current levels, with a stop-loss below the 52-week low of $39.05. Monitor institutional inflows and Zillow’s Q2 earnings for further catalysts.

The housing market will rebound—and when it does, Zillow will lead the charge.