Zillow Group Inc. shares plummeted after the company predicted that a significant contraction in home sales would weigh on the amount of advertising it can sell to real estate agents.
The company, which makes most of its money by helping agents connect with homebuyers, has been riding the housing roller coaster for more than two years, shifting from a sharp slowdown in the early days of the pandemic, to the boom that followed, and now a period of higher mortgage rates and cooling sales.
The ongoing downturn led Zillow to project earnings before interest, taxes, depreciation and amortization of $73 million to $88 million in the third quarter, according to a shareholder letter Thursday. That missed the $170 million analysts were expecting, and Zillow shares fell as much as 11% in trading after New York markets closed.
Zillow wasn’t the only real estate technology company to provide discouraging guidance for the third quarter. Brokerage Redfin Corp. also fell in late trading after the company forecast wider losses than analysts estimated. Opendoor Technologies Inc. projected a loss, saying the sharp slowdown in housing demand would push it to cut prices on some of its listings. Its shares rose slightly.