Zillow Stock Pops on CEO News, Revenue Beat

Zillow also posted revenue that beat analysts' expectations

by Lillian Currens

Published on Feb 22, 2019 at 10:04 AM

The shares of Zillow Group Inc (NASDAQ:ZG) are up 9.8% at $38.48 in early trading after the company's founder Richard Barton announced his return as CEO last night. The news came with the online real estate concern's fourth-quarter earnings report, in which Zillow posted stronger-than-expected revenue.

ZG has suffered two dramatic bear gaps in the last year, bottoming out at a two-year low of $26.20 on Nov. 20. Since then, they've bounced back some to take back the 50-day moving average. The $40 mark, near an early November bear gap, could be the next hurdle for the shares.

Analyst attention has been mixed, as RBC slashed its price target to $39 from $42, while Morgan Stanley and Jefferies raised their targets. Prior to today's buzz, ZG held 12 tepid "hold" ratings, five "strong buy" ratings, and two "strong sells." Plus, the consensus 12-month target price is now right in line with current levels. 

An unwinding of pessimism might mean additional tailwinds, too. Ahead of earnings, the 3.87 million shares sold short only represented 3% of the stock's available float. However, it would still take well over a week for traders to buy back these bearish bets, at ZG's average daily trading volume. 

Short sellers' bearish behavior is echoed on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), where the security sports a 10-day put/call volume ratio of 3.88 that sits in the 92nd percentile of this annual range. This means that in the past two weeks, nearly four puts have been bought to open for every call, a much quicker pace than usual. 

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