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Pomerantz LLP announces that a class action lawsuit has been filed against Zillow Group, Inc. and certain of its officers. The class action, filed in the United States District Court for the Western District of Washington, Seattle Division, and docketed under 21-cv-01567, is on behalf of a class consisting of all persons and entities other than Defendants that purchased or otherwise acquired Zillow securities between February 10, 2021 and November 2, 2021, inclusive (the “Class Period”). Plaintiff pursues claims against the Defendants under the Securities Exchange Act of 1934 (the “Exchange Act”).
If you are a shareholder who purchased Zillow securities during the Class Period, you have until January 18, 2022 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at newaction@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
Zillow is a real estate company that purports to offer customers “an on-demand experience for selling, buying, renting or financing with transparence.” The Company’s “Zillow Offers” business “buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline.”
The complaint alleges that, throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (i) despite operational improvements, the Company experienced significant unpredictability in forecasting home prices for its Zillow Offers business; (ii) such unpredictability, as well as labor and supply shortages, led to a backlog of inventory; (iii) as a result of the foregoing, the Company was reasonably likely to wind-down its Zillow Offers business, which would have a material adverse impact on its financial results; and (iv) as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
On October 18, 2021, the Company announced that Zillow Offers suspended signing of new contracts through 2021 and would focus on its current inventory, citing “a backlog in renovations and operational capacity restraints.” Zillow claimed that “[p]ausing new contracts will enable us to focus on sellers already under contract with us and our current home inventory.”
On this news, Zillow’s Class A share price fell $8.84, or 9.4%, to close at $85.46 per share on October 18, 2021, and Zillow’s Class C share price fell $8.97, or 9.4%, to close at $86.00 per share on October 18, 2021, on unusually heavy trading volume.
Then, on November 2, 2021, after the market closed, Zillow announced that it would wind-down Zillow Offers because “the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility.” As a result, third quarter 2021 financial results included “a write-down of inventory of approximately $304 million within the Homes segment as a result of purchasing homes in Q3 at higher prices than the [C]ompany’s current estimates of future selling prices.” Moreover, the “[C]ompany further expects an additional $240 million to $265 million of losses to be recognized in Q4 primarily on homes it expects to purchase in Q4.” The “wind-down is expected to take several quarters and will include a reduction of Zillow’s workforce by approximately 25%.”
On this news, Zillow’s Class A share price fell $19.62, or 23%, to close at $65.86 per share on November 3, 2021, on unusually heavy trading volume. Zillow’s Class C share price fell $21.73, or 25%, to close at $65.47 per share on November 3, 2021, on unusually heavy trading volume.
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com.
CONTACT:
Robert S. Willoughby
Pomerantz LLP
rswilloughby@pomlaw.com
888-476-6529 ext. 7980
