Zillow Forecast Miss Sparks Sharp Drop, Pulls Down Real-Estate Peers

Zillow Group shares plunged as much as 20% after the company issued a first-quarter adjusted EBITDA forecast that fell short of analysts' expectations. The guidance miss set off a wider retreat in real-estate-linked equities, with CBRE and Rocket Companies both falling about 10% during the trading session. The decline in Rocket's stock came despite recent bullish notes from several analysts and follows the recent integration of Mr. Cooper.

Key Points

Zillow Group shares plunged as much as 20% after issuing a first-quarter adjusted EBITDA forecast that missed analyst expectations, the largest drop since 2021.
The guidance shortfall triggered a broader decline in real-estate-linked stocks, with CBRE and Rocket Companies each falling about 10% in the same trading session.
Analysts at Morgan Stanley and Bank of America had pointed to potential upside at Rocket Companies, and BTIG noted that Rocket’s merger with Mr. Cooper closed on October 1, 2025, making the fourth quarter the first full period of integration; the pro-forma servicing portfolio was described as nearly $1.3 trillion in unpaid principal balance with an estimated fair market value of about $19 billion.

Market reaction

Zillow Group shares tumbled by up to 20% on Wednesday after the online real-estate marketplace released a first-quarter adjusted EBITDA forecast that did not meet analyst expectations. The drop represented Zillow’s sharpest single-session fall since 2021 and prompted investors to reprice exposure to companies tied to the housing market.

Broader selloff among real-estate-linked names

The weakness in Zillow shares coincided with a wider pullback across real-estate-related stocks. Notably, both CBRE and Rocket Companies saw their shares fall roughly 10% during the trading day, reflecting spillover effects from Zillow’s disappointing outlook.

Analyst commentary on Rocket Companies

The share decline at Rocket occurred despite positive analyst notes preceding the move. Morgan Stanley highlighted that Rocket’s 8-K filing confirmed the strongest fourth-quarter gain-on-sale margin in four years, and the bank suggested that this could point to about a 10% upside to adjusted revenue estimates. Bank of America had also reiterated a Buy rating ahead of fourth-quarter results, observing that industry data and the company’s commentary indicated meaningful upside potential for both mortgage origination volumes and gain-on-sale revenue.

Integration and portfolio context

BTIG drew attention to Rocket’s recent corporate changes, noting that its merger with Mr. Cooper closed on October 1, 2025. That timing makes the fourth quarter the first full period that reflects the combined operations. BTIG also described the pro-forma servicing portfolio, which contains nearly $1.3 trillion in unpaid principal balance of mortgage servicing rights and carries an estimated fair market value of about $19 billion.

Takeaway

The immediate market response underscores how a single company’s guidance can reverberate across related sectors. Zillow’s guidance shortfall directly pressured its own stock and appears to have amplified volatility among real-estate services and mortgage-finance names, even where analysts had highlighted potential upside.

Risks

Guidance shortfalls - A company forecast that misses expectations can trigger sharp declines in its stock and create spillover pressure across related real-estate and mortgage-finance equities, affecting investor sentiment in those sectors.
Market sentiment vs. analyst views - Rocket Companies experienced a significant share drop despite positive analyst commentary, highlighting a risk that market reactions may diverge from analyst expectations and impact mortgage lenders and servicers.
Integration and portfolio valuation uncertainty - Rocket’s recent merger with Mr. Cooper means the fourth quarter was the first full reporting period for the combined business; integration dynamics and the valuation of a large mortgage servicing rights portfolio (nearly $1.3 trillion unpaid principal balance, fair market value about $19 billion) present execution and valuation risks for mortgage servicing and finance markets.

Menu

Key Points

Risks

More from Stock Markets