Zillow Group, Inc.
|Company Name||Zillow Group, Inc.|
|Stock Symbol||December 06, 2021|
|Class Period||February 10, 2021 to November 02, 2021|
|Lead Plaintiff Motion Deadline||January 18, 2022|
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, Zillow announced that it was winding 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 $304 million inventory writedown, and the Company further expected “an additional $240 million to $265 million of losses to be recognized in Q4.”
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, thereby injuring investors. 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.
The complaint filed in this class action alleges that throughout the Class Period, the 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: (1) that, despite operational improvements, the Company experienced significant unpredictability in forecasting home prices for its Zillow Offers business; (2) that such unpredictability, as well as labor and supply shortages, led to a backlog of inventory; (3) that, 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 (4) that, 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.
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