Case Background:
This is a federal securities fraud class action lawsuit on behalf of those who purchased or otherwise acquired Zillow Group, Inc. (“Zillow”) (NASDAQ: ZG; Z) common stock between August 5, 2021 and November 2, 2021, inclusive (the “Class Period”).
Zillow operates several real estate websites, and in 2018 the company expanded from just operating the sites to buying houses directly from consumers, renovating those houses, and reselling them for a profit. This business is known as the “Instant Buyer” or “iBuyer” market, and Zillow launched its expansion as “Zillow Offers. By 2021, Zillow Offers’ growth was lagging. In an attempt to jumpstart it, Plaintiff alleges that in Spring 2021, Defendants undertook a series of drastic and risky actions, including applying large “overlays” on top of the values generated by Zillow’s pricing algorithms, which significantly increased purchase offers. Not surprisingly, many homeowners accepted Zillow’s inflated offers and soon the company was touting the “strong demand” for Zillow Offers to investors while concealing the risky overlays that had actually driven growth.
The complaint alleges that, throughout the Class Period, Defendants made false and misleading statements and failed to disclose that: (1) despite operational improvements, Zillow experienced significant unpredictability in forecasting home prices for its Zillow Offers business; (2) such unpredictability, as well as labor and supply shortages, led to a backlog of inventory; (3) as a result, Zillow was reasonably likely to wind down its Zillow Offers business, which would have a material adverse impact on its financial results; and (4) consequently, Defendants’ statements about Zillow’s business, operations, and prospects were materially false and/or misleading and/or lacked a reasonable basis at all relevant times.
Current Status of Case:
On August 23, 2024, the Court granted the Lead Plaintiff’s Motion for Class Certification. Defendants appealed the District Court’s decision to the United States Court of Appeals for the Ninth Circuit. On January 6, 2026, the Ninth Circuit entered its final order denying Defendants’ appeal and sent the case back to the District Court for the parties to continue with discovery. This action is ongoing.
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