Zillow announced it has sold about half of its backlog of homes and will begin buying back stocks after shuttering its home-flipping arm, Zillow Offers.
In a statement, the company said it had already sold or agreed to sell more than half of its properties, hitting a much faster pace than expected.
“We are pleased with the progress of our wind-down efforts and recognize that no longer operating Zillow Offers will allow us to have a more capital-efficient balance sheet and business moving forward,” Chief Executive Officer Rich Barton said in the statement. “We see today as an opportune time to announce a share repurchase program.”
Zillow had initially announced it would not buy more homes in 2021, and instead turn its focus to renovating and selling inventory. But Zillow CEO Rich Barton later acknowledged Zillow’s failure was its inability to predict home-price appreciation and announced the closing of Offers in its Q3 earnings report. Offers lost $381 million, with a total loss of $169 million across the company.
Share prices fell 60% in the wake of the closing. However, the company is rebounding after the announcement of its home sales. Zillow now says it expects Offers to account for at least $2.9 billion in revenue in Q4, and shares have jumped 8.2% to $58.20.
While Zillow seems to be recovering faster than some industry pros anticipated, the company still faces problems as a result of the Offers catastrophe. Two lawsuits allege Zillow and some of its top executives made misleading claims about the company that led to lost investments.
“Throughout the Class Period, 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,” the suit reads.
It claims that Zillow did not disclose the “significant unpredictability in forecasting home prices” the company was struggling to overcome or its inventory backlog, both of which would have signaled to investors that it was “likely to wind-down” Zillow Offers.