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.
The post iBuying? No, iSelling as investors dump Zillow shares appeared first on The Real Deal Los Angeles.
Powered by WPeMatico