Investor Lawsuit Against Zillow Set to Go Ahead

December 12, 2022
Share this Post: 

Zillow's motion to dismiss an investor lawsuit against itself has been rejected, which means the portal giant now faces a legal battle to determine whether Zillow shareholders' rights were abused by the ill-fated "Zillow Offers" iBuying business.

Zillow shareholders filed a lawsuit against the company in July amid claims that the portal lost upwards of $1.2bn on its iBuying program—with investors keen to point out that Zillow had both A) hid the risk associated with its iBuying business and B) made "materially false and misleading statements" regarding Zillow Offers.

The original claim went on to say that:

"Zillow CEO Richard Barton should have known that Zillow Offers was creating significant losses for the Company. He either did not investigate and knew or failed to investigate the damages Zillow Offers caused the Company.”

The complaint, brought by shareholder rights firm Robbins LLP—filed on behalf of shareholders who purchased Zillow securities between February-November 2021—alleges that Zillow saddled itself with excess inventory when Zillow bought up real estate stock as part of its iBuying strategy—putting shareholders' investments at undue risk.

The complaint seeks unspecified damages.

Now Zillow will need to defend itself in court—with shareholders' own money at risk if the courts rule against Zillow.

Zillow has been embroiled in many legal battles recently, including a patent lawsuit against IBM and a (slightly bizarre) "wiretapping" case. A federal court judge has also ordered Zillow to hand over FSBO data to REX.

In short, a tough year for Zillow. The portal recently laid off another 300 employees amid a struggling market and recorded a bittersweet $53m net loss in its Q3 results.

December 12, 2022
Harvey is an experienced property journalist and copywriter. He has written about the property industry since 2015, starting at The Property Franchise Group in the UK, before moving to Spain to work for Spotahome. He has blogged for the private rented sector, ghostwritten for UK property experts and written case studies for franchise owners around the UK. Harvey joined Online Marketplaces as a News Editor in 2022.

Subscribe to our mailing list to get the famous, free Friday newsletter!

News and analysis to help build better online marketplace businesses, in your inbox, every Friday

Related News

Onthemarket Debt
OnTheMarket To Be Sold? US Investor Pens Open Letter to Shareholders Outlining His Vision

This one is already a nominee for "most unexpected headline of 2023" at Online Marketplaces. A US investor by the...

Read More
General Atlantic
General Atlantic Nets $220m as it Divests from Swedish Portal Hemnet

The private equity firm General Atlantic has divested from Hemnet according to a press release issued by the Swedish portal...

Read More
Streeteasy Skyline
StreetEasy to Introduce Tools to Capture Seller Leads for Agents

StreetEasy is set to launch a trio of products that the Zillow-owned portal says will capture the highly lucrative seller...

Read More
Homely Financial Results
Homely Officially Becomes Australia's #3 Portal

Industry-owned portal Homely has revealed that it became Australia's number three portal for the first time in 2022, based on...

Read More

Editor's Pick