Zillow's Insider Exodus and Overvalued Stock: Time to Sell?

The real estate tech giant Zillow Group (NASDAQ: Z) has faced mounting scrutiny as its stock price hovers near $55—a level that appears increasingly disconnected from both insider sentiment and fundamental value. Recent SEC filings reveal a stark pattern: over the past year, 47 insiders have sold shares totaling millions of dollars, while not a single insider has reported a buy transaction. Combined with a stock price trading 20% above its calculated intrinsic value, this confluence of signals raises a critical question: Is Zillow’s current valuation a bubble waiting to burst?

The Insider Sell-Off: A Lack of Confidence

At the center of this trend is CEO Jeremy Wacksman, who recently sold $1.27 million worth of shares in a single transaction on May 14, 2025. This follows a series of sales stretching back to February 2025, where Wacksman and other executives unloaded over $1.38 million in Zillow stock (see ). While these sales are partly tied to prearranged 10b5-1 trading plans—common for executives managing equity compensation—the sheer volume and timing of these transactions send a troubling message.

Notably, no insider has bought a single share in the past year. Even routine grants or awards (uninformative buys) pale against the selling frenzy. For context, Zillow’s directors and officers held 25% of the company’s shares as of May 2025, yet their collective exit strategy—$57.6 million in sales over two years—suggests a lack of confidence in the stock’s near-term trajectory.

Valuation: A 20% Premium to Intrinsic Value

Zillow’s stock trades at $55, but GuruFocus estimates its intrinsic value at just $46.08, a gap of nearly $9—or 20%. This disconnect is alarming. Intrinsic value calculations typically consider metrics like discounted cash flows, earnings multiples, and peer comparables. For Zillow, the overvaluation is even more stark when analyzing its fundamentals:

• Revenue Growth: Zillow’s revenue has stagnated, with a 2.3% year-over-year decline in Q1 2025. Its core iBuying business (buying homes to resell) has faced margin pressure as housing inventory tightens.
• Profit Margins: Net margins have shrunk to 5.2% in 2025, down from 8.1% in 2023, reflecting rising costs and competition.
• Valuation Multiples: At 12x forward earnings, Zillow trades at a 40% premium to its five-year average P/E ratio, despite slowing growth.

A would show this overvaluation in stark relief. Even optimists would struggle to justify today’s price without a dramatic turnaround in profitability or market share.

The Bear Case: Why the Sell Signal Is Clear

The combination of insider exits and overvaluation creates a compelling case for caution:
1. Insider Sentiment as a Leading Indicator: Historically, mass insider selling correlates with subsequent stock underperformance. With no buyers to offset the 47 sales, Zillow’s leadership is signaling that current prices are unsustainable.
2. Valuation Risk: A 20% premium to intrinsic value leaves little room for error. If housing market headwinds persist or Zillow’s iBuying division falters, the stock could correct sharply.
3. Technical Weakness: The stock’s 2025 decline—from $80 to $55—aligns with major insider sales, suggesting institutional investors are already losing faith.

Investment Recommendation: Sell or Stand Aside

The evidence points to one conclusion: Zillow’s stock is overvalued and its insiders are exiting en masse. Investors should:
- Sell existing positions: The risk-reward here is skewed toward downside, especially with no near-term catalysts to justify the $55 price.
- Avoid new purchases: At current levels, the stock offers little margin of safety. Wait for a pullback to intrinsic value or better fundamentals.

While Zillow’s long-term potential in real estate tech remains valid, the current valuation and insider behavior demand caution. This is not a stock to “buy the dip”—it’s a warning sign to sell before the music stops.

In investing, the combination of poor insider sentiment and stretched valuations is a potent bearish cocktail. For Zillow, this cocktail is already mixed—and the glass is half empty.