Zillow sued in securities fraud class action

Posted on: December 10th, 2012 by Steve Larson

According to a recently filed complaint in the Western District of Washington, Zillow (NASDAQ: Z) did not disclose to shareholders that it was having trouble signing up new real estate agents as customers and retaining existing subscribers.  The complaint alleges that as a result of Zillow’s omissions, shares of the Washington-based real estate data company reached a high of $46.17 per share on September 20, allowing executives and board members to sell 3.1 million shares of their own Zillow stock for proceeds of about $115 million.  Zillow also received $156 million through a secondary equity offering in September 2012. 

Zillow published a press release after the markets closed on November 5, revealing its third quarter 2012 financial results,  and reducing its fourth quarter and full year 2012 revenue guidance below analysts’ expectations.  Additionally, Zillow disclosed that its predictions of home prices, known as “Zestimates,” lost a significant advertiser, Foreclosure.com, and as a result, the company’s display advertisement revenue showed weakness.

Subsequently, shares of Zillow fell 18.1% to close at $28.15 per share on November 6, 2012.

If you purchased shares of Zillow between February 15, 2012 and November 6, 2012, you may file a motion with the court no later than January 28, 2013, and request that the court appoint you as lead plaintiff.  A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation.  To be appointed lead plaintiff, the court must decide that your claim is typical of the claims of other class members and that you will adequately represent the class.  Your share in any recovery will not be enhanced or diminished by your decision of whether or not to serve as a lead plaintiff.  You can recover as an absent class member without moving for lead plaintiff.