Zillow’s Numbers and a Legal Cloud

So, Zillow. A company dedicated, as far as I can tell, to convincing us that the price of houses is both utterly fascinating and perpetually baffling. On Wednesday, its stock took a bit of a tumble – roughly 17%, if you’re keeping score, which, let’s be honest, most of us aren’t, not with the precision of a 17th-century cartographer, anyway. The reason? Well, it involves lawyers. And whenever lawyers are involved, it’s generally a good idea to brace yourself.

It’s not that Zillow is doing badly, exactly. Quite the opposite. Their fourth-quarter revenue rose a respectable 18% to $654 million. Their rental business is booming – up 45% – which is perhaps not entirely surprising. People, it turns out, still require shelter. And mortgages, too, are doing nicely, increasing 39%. It’s all very…robust. The CEO and CFO, Jeremy Wacksman and Jeremy Hofmann (a remarkable concentration of Jeremys, wouldn’t you say?), cheerfully informed shareholders that more and more people are turning to Zillow to help them navigate the often-perilous journey of moving. It’s a comforting thought, that a website can offer guidance in such a life-altering undertaking.

Profitability is up, too. Their adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization – a wonderfully opaque acronym, isn’t it? It’s like a financial riddle) climbed a solid 33% to $149 million. All good news. So why the stock dip? Ah, yes, the lawyers. It appears Zillow is currently embroiled in several ongoing lawsuits, and legal costs, predictably, are expensive. They anticipate these costs will reduce their adjusted EBITDA margin by a full 2 percentage points in the first quarter.

Now, 2 percentage points may not sound like much, but in the world of high finance, it’s apparently the difference between a comfortable retirement and a lifetime spent collecting bottle caps. The Jeremys assure everyone that they are “confident in their positions and approach” and that these legal matters won’t significantly impact their long-term strategy. Which is reassuring, I suppose. Though it does make you wonder what exactly those lawsuits are about. Probably something to do with overly optimistic house valuations, I’d wager. Or perhaps a dispute over the proper use of the word “cozy.” One never knows.

Wall Street, it seems, was expecting a slightly higher adjusted EBITDA – around $184 million, as opposed to the $160 to $175 million Zillow is projecting. A relatively small difference, perhaps, but Wall Street is a demanding mistress. She wants more, always more. It’s a bit like trying to fill a bottomless pit with gold coins.

2026-02-12 04:42

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