The lawsuit, filed by Zillow shareholder attorney Dibikar Barua in federal court in Seattle, appears to be the first in a series of lawsuits over the real estate company’s decision to cancel Zillow Offers. Other trial attorneys are actively seeking Zillow shareholders to participate in additional lawsuits against the company.
Such cases often occur when sudden decisions by companies cause their stock prices to plunge. Zillow Group’s share price fell 60% within three days in early November when the status of Zillow Offers became clear.
Under the Zillow Offers program, the company has purchased thousands of homes, intending to sell them for a profit, using scale and price estimation technology to its advantage. Zillow Offers has competed with similar offerings from Opendoor, Offerpad, Redfin and others who are still pursuing the business model.
Zillow has dedicated an extension of its annual 10-K regulatory filing to warn investors of the risks and uncertainties of the Zillow Services business, following consumer company practice. standard.
However, the lawsuit cites positive public statements that Zillow executives have made about Zillow’s Incentives in the months leading up to its closure.
As recently as September 13, for example, Zillow CEO Jeremy Wacksman told a Piper Sandler conference that “the strength and appeal of Zillow Coupons will continue to grow and evolve.” We are now even more confident that this will be a true all-weather offering on the market,” according to the suit.
The complaint also cites this quote from Zillow Group CEO Rich Barton in the company Announces second quarter earnings on August 5: “Of particular note, our iBuying business, Zillow Offers, continues to accelerate as we offer more customers a fast, fair, flexible, and convenient way to travel. Zillow offers are proving enticing for sellers even in this hot seller’s market. “
The lawsuit, filed by Seattle law firm Rossi Vucinovich PC, alleges that “such misinformation and/or material omissions were made knowingly or recklessly and with intent and The effect is to hide Zillow’s financial condition and prospects from the investing public and to support its stock price to be artificially inflated. ”
Shutdown notification On November 2, Barton said in a statement, “We have identified unpredictability in our home price forecasts that are well beyond what we expected, and the continued expansion of the Zillow Offer would lead to too much earnings and balance sheet volatility.”
About 25% of Zillow Group’s workforce, or about 2,000 people, is being laid off due to the closure of Zillow Offers. The company is writing off more than $500 million in closures.
The lawsuit seeks unspecified financial damages. Zillow is reviewing the lawsuit but does not comment on pending litigation, spokesman Viet Shelton said.