iBuying? No, iSelling as investors dump Zillow shares

Stock plummets after company gives up on iBuying

National /
Nov.November 04, 2021 04:30 PM
Illustration of Zillow's Rich Barton (Photo illustration by Kevin Rebong for The Real Deal)

Zillow’s Rich Barton (Photo illustration by Kevin Rebong for The Real Deal)

Zillow’s faulty trading algorithm, which caused it to overpay for thousands of homes, left investors feeling they paid too much for its stock.

Its shares staged a modest rebound on Thursday, climbing about 3 percent, a day after they lost more than a fifth of their value on news the company scuttled its once-promising foray into iBuying, or instant buying, and said it would lay off a quarter of its employees. Zillow’s shares have slid since February, erasing more than half its market value, even as home prices surged nationwide.

The stock fetched $67.48 at Thursday’s closing bell, down from more than $200 in February. The company, led by CEO Rich Barton, announced a quarterly loss of $420 million earlier in the week.

Zillow’s loss is another instant homebuyer’s gain.

Rival Opendoor jumped almost 14 percent almost Thursday, just about reversing its 15 percent slump Wednesday. Unlike Zillow, the firm is doubling down on iBuying, increasing its borrowing capacity to $9 billion, which will allow it to acquire more than 40,000 homes at an average price of $350,000, Bloomberg reported.

Whether technology can facilitate rapid home valuations and closings at competitive prices remains to be seen. At least one well-known investor has changed her mind on Zillow.

Cathie Wood’s ARK Investments sold 2.9 million shares of its stock Wednesday, a day after gobbling up almost 300,000 in an attempt to buy the dip, the Wall Street Journal reported. Wood’s firm still holds about 6.7 million shares of Zillow, according to the Journal, and 5.9 million shares of Opendoor, according to Yahoo Finance.





    Related Articles

    arrow_forward_ios
    Zillow CEO Spencer Rascoff is stepping down as his co-founder takes over
    Zillow CEO Spencer Rascoff is stepping down as his co-founder takes over
    Zillow CEO Spencer Rascoff is stepping down as his co-founder takes over
    Placeholder image
    Zillow to pay $50M for StreetEasy
    Zillow to pay $50M for StreetEasy
    Proptech unicorn Pacaso’s meteoric rise — and fallout
    Proptech unicorn Pacaso’s meteoric rise — and fallout
    Proptech unicorn Pacaso’s meteoric rise — and fallout
    $22M pad at 111 West 57th tops Manhattan luxury market
    $22M pad at 111 West 57th tops Manhattan luxury market
    $22M pad at 111 West 57th tops Manhattan luxury market
    Buyer in deal for oceanfront Wainscott home asking $37M
    Buyer in deal for oceanfront Wainscott home asking $37M
    Buyer in deal for oceanfront Wainscott home asking $37M
    Deconstruct Podcast
    TRD’s podcast “Deconstruct” looks at the Hudson Valley craze
    TRD’s podcast “Deconstruct” looks at the Hudson Valley craze
    Boxed out: Supply chain, energy crises rock real estate
    Boxed out: Supply chain, energy crises rock real estate
    Boxed out: Supply chain, energy crises rock real estate
    The Georgetown house once owned by Julia Child (Zillow)
    Georgetown home where Julia Child lived hits market for $3.5 million
    Georgetown home where Julia Child lived hits market for $3.5 million
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...