Zillow stock rebounds after company says it is selling houses faster than expected, will rebuy stock with the cash
Zillow Group Inc. revealed Thursday afternoon that it has sold or is in the process of selling more than half the homes it purchased in a home-buying spree earlier this year that led the company to end its Offers business.
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“We are pleased with the progress of our wind-down efforts and recognize that no longer operating Zillow Offers will allow us to have a more capital-efficient balance sheet and business moving forward,” Zillow Chief Executive Rich Barton said in a statement. “With that, we see today as an opportune time to announce a share repurchase program and reduce the cash balance we built up to support Zillow Offers.”
Opinion: Zillow thought it could rule the housing market. It was very wrong.
Zillow stated that more than 50% of its homes are now under contract or that it has agreed on disposition terms for them. Management now expects revenue of $2.3 billion to $2.9 billion for the home-buying business in the fourth quarter, after previously stating guidance of $1.7 billion to $2.1 billion. Executives said Thursday they continue to believe that the wind-down of the business will be cash-flow neutral at least, including the repayment of nearly $3 billion in secured debt.
Zillow shares gained nearly 9% in after-hours trading following the announcement. The stock was pummeled in the wake of last month’s revelation, and ended Thursday’s regular session down 45.2% in the past three months. Overall, Zillow shares are down 58.2% so far this year, while the S&P 500 index SPX,
