Zillow Group stock is crashing today after a disappointing earnings call after market close yesterday. As of the time of this writing, Zillow stock is down over 17% to $72 per share in premarket trading, according to Yahoo Finance. The online real estate platform reported its Q3 2021 results yesterday, with the company reporting a loss of 95¢ per share and revenue of $1.74 billion when revenue closer to $2 billion was expected, reports CNBC.
But what’s really driving Zillow stock’s crash this morning is the fact that the company announced it will wind down its Zillow Offers division—its home-buying business. Zillow Offers offered home sellers fair market value for their homes, which it would then sell to others at a (hopefully) higher price than it paid.
However, the volatility of the recent housing market has made the Zillow Offers division untenable, according to CNN. In a press release announcing its Q3 results, Zillow Group cofounder and CEO Rich Barton said, “we’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility.” As CNN points out, Zillow sold its average home at an $80,771 loss in Q3.
Unfortunately, the shuttering of Zillow Offers isn’t the only thing that the company announced. As a result of closing that division, Zillow also said it will reduce its workforce by around 25%—about 2,000 employees. “The most difficult part of this decision is that it will impact many of our colleagues. This is not something we take lightly. We are grateful for their efforts, and we are committed to providing a smooth transition,” Barton said.