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Zillow Group, Inc. (NASDAQ:ZG) announced Monday it will enter into agreements with Morgan Stanley & Co. LLC, Citibank, N.A., Barclays Bank PLC, and JPMorgan Chase Bank, National Association, New York Branch to unwind and terminate certain capped call transactions originally established in September 2019. These transactions were related to the company’s previously outstanding 1.375% Convertible Senior Notes due 2026, which were fully settled in December 2024.
Upon completion of the unwind transactions, Zillow expects to receive an aggregate of 3.1 million shares of its Class C capital stock and $38.2 million in cash from the counterparties. The company stated that this will reduce the total number of its Class C shares outstanding. The transaction comes as Zillow’s stock trades near its 52-week high, with InvestingPro analysis showing robust liquidity metrics, including a healthy current ratio of 3.34.
In connection with the unwind, the counterparties may buy or sell shares of Zillow’s Class C capital stock in secondary market transactions or unwind various derivative positions related to the stock.
After the transactions are settled, Zillow will have no remaining capped call transactions outstanding.
This information is based on a press release statement included in the company’s filing with the U.S. Securities and Exchange Commission.
In other recent news, Zillow Group’s second-quarter earnings have drawn attention from multiple analysts. The company reported revenue of $655 million, marking a 15% year-over-year increase, and an EBITDA of $155 million with a 24% margin, slightly surpassing analyst expectations. Evercore ISI responded by raising its price target for Zillow to $95.00, maintaining an Outperform rating. Similarly, Cantor Fitzgerald increased its price target to $74.00, noting the company’s strong performance in its For Sale and mortgage segments. Piper Sandler also raised its price target to $94.00, emphasizing Zillow’s Flex revenue growth, which increased by 44% year-over-year. Benchmark maintained a Buy rating with a $95.00 price target, highlighting Zillow’s focus on new construction. These developments reflect Zillow’s strategic initiatives and execution amid a challenging housing market.
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