According to the law firm press release, the complaint charges Zillow and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Zillow is a real estate information marketplace.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business practices and financial results. Specifically, defendants concealed the difficulties Zillow was having signing up new real estate agents as subscribers and the churn it was experiencing in existing subscribers. As a result of defendants’ false statements, Zillow’s stock traded at artificially inflated prices during the Class Period, reaching a high of $46.17 per share on September 20, 2012. While Zillow’s stock price was artificially inflated, Company insiders sold 3.1 million shares of their own Zillow stock for proceeds of nearly $115 million, including $103 million worth of stock sold by the officers named as defendants. The Company also was able to raise $156 million in proceeds through a follow-on offering in September 2012, just eight weeks before the end of the Class Period when defendants were forced to reduce revenue guidance and just 30 days after assuring investors that the filing of a Form S-3 Registration Statement was just part of “good housekeeping,” and was not intended for a follow-on offering.
Then, on November 5, 2012, after the market closed, Zillow issued a press release announcing its third quarter 2012 financial results and reducing its fourth quarter and full year 2012 revenue guidance, revealing revenue expectations that fell below analysts’ estimates. Furthermore, Zillow announced that its estimates of home valuation, referred to as “Zestimates,” had lost a large display advertiser, Foreclosure.com, and therefore defendants expected weakness in the Company’s display advertising business. These disclosures caused Zillow stock to collapse $6.22 per share to close at $28.15 per share on November 6, 2012, a one-day decline of nearly 18% on volume of 7.4 million shares.
On April 24, 2013, the Court issued an Order appointing lead plaintiff and approving the selection of lead counsel. The lead plaintiffs filed an amended and consolidated complaint on June 24.
On August 22, 2013, the parties filed a Stipulation agreeing to the dismissal of an individual defendant.
On October 20, 2014, the Court issued an Order granting Defendants' Motion to Dismiss. This dismissal was with prejudice, and the case is now closed.