Key facts
- Zillow will pay $212.5 million in cash to settle a class action lawsuit.
- Shareholders accused Zillow of misleading them about its failed Zillow Offers home-flipping venture.
- The settlement requires a judge's approval.
- Zillow's stock price fell 32% in November 2021 after news of the venture's struggles.
Zillow will pay $212.5 million in cash to settle a class action lawsuit that accused the online real estate marketplace of misleading shareholders about its failed Zillow Offers home-flipping venture. The company did not admit wrongdoing in agreeing to the settlement, which requires a judge's approval. The settlement comes after the US Supreme Court refused to hear Zillow's appeal from a lower court ruling that allowed the case to proceed. The lawsuit began after a 32% plunge in Zillow's stock price over two days in November 2021, following news that most homes in the Zillow Offers inventory were worth less than the company paid. Zillow subsequently announced it would close Zillow Offers, take a $304 million writedown, and lay off 25% of its workforce. Shareholders alleged they were defrauded into buying Zillow shares at inflated prices because the company's leaders presented an overly positive view of Zillow Offers. Lawyers for Zillow denied accusations of securities fraud. Zillow stated that insurance would cover about $48 million of the payout, and some of the funds would pay the shareholders' lawyers. Steve Berman, a lawyer for the shareholders, believes the securities settlement is the largest in the federal court district that includes Seattle, where the case was filed.