Shares of Zillow Group (Z -1.76%) (ZG -1.50%) fell by as much as 15% Friday morning after the company reported its first-quarter results. While Zillow beat analysts' consensus estimates on both top and bottom lines, investors appeared disappointed with the company's second-quarter revenue guidance.
Shares rebounded somewhat from that initial drop, but the real estate tech company's stock was still down by 3.2% as of 12:18 p.m. ET.
Zillow reported first-quarter adjusted earnings of $0.49 per share, which easily topped Wall Street's average estimate of $0.26 per share.
The company's sales of $4.26 billion in the quarter -- up 250% from the year-ago quarter -- were also better than analysts' consensus estimate of $3.39 billion.
"While the housing market outlook may be choppy in the near term, today's first-quarter results, together with our strong brand, audience, and balance sheet, demonstrate how well-positioned and prepared Zillow is to forge ahead," Zillow co-founder and CEO Rich Barton said in a press release.
But despite the revenue and earnings beat, investors were more focused on the company's second-quarter guidance. Management said that Q2 sales will be in the range of $903 million to $1.03 billion, which was far below Wall Street's average estimate of $1.81 billion.
Given that underwhelming guidance, investors may be concerned that the company could experience some headwinds from the current housing market.
The combination of still-rising home prices and mortgage rates that recently surged back to levels last seen more than a decade ago is adding uncertainty to a housing market that hasn't been normal since the beginning of the pandemic.
Unfortunately for Zillow shareholders, the hot housing market hasn't translated into any gains over the past year. The company's share price has tumbled 64% over the past 12 months.