Seattle-based Zillow faces a second shareholder lawsuit over its recent closure of Zillow Offers, Zillow’s attempt at algorithm-assisted house-flipping known as iBuying.
After months of positive statements about Zillow Offers, the company announced in October that it would stop signing contracts for new homes. Then, in early November, the company said it would shutter Zillow Offers and lay off a quarter of its staff because it was no longer able to accurately predict home prices. Zillow share prices dropped 23% the next day.
The complaint filed in federal court in Seattle on Friday alleges Zillow executives “made materially false and/or misleading statements” and failed to disclose that it was facing “significant unpredictability” in forecasting home prices for Zillow Offers. The complaint cites positive statements from Zillow executives earlier in 2021, including that Zillow Offers was “surpassing our internal expectations on revenue” and other measures.
The complaint is nearly identical to another filed on Tuesday. Both seek class action status on behalf of shareholders who acquired Zillow stock between Feb. 10 and Nov. 2.
Attorneys with the Seattle firm Badgley Mullins Turner, PLLC, along with several attorneys based in New York, filed the complaint Friday on behalf of shareholder Steven Silverberg.
A Zillow spokesperson said Tuesday the company does not comment on pending litigation.