What Happened?
Shares of online real estate marketplace Zillow (NASDAQ:ZG) fell 4% in the afternoon session after the company was sued by the U.S. Federal Trade Commission (FTC) and a coalition of states over an alleged illegal scheme to eliminate competition in the online rental listings market.
The lawsuits allege that in February 2025, Zillow paid rival Redfin $100 million to shut down its apartment rental advertising business and transfer clients to Zillow. According to the FTC and attorneys general from five states, including New York and Washington, this agreement violates federal antitrust laws. Regulators are concerned the deal will reduce innovation, increase advertising costs for landlords, and ultimately harm renters by limiting their choices. The legal actions seek to unwind the agreement and come amidst a series of other lawsuits Zillow is currently facing, putting the company under an intense legal spotlight.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Zillow? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Zillow’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 3.7% on the news that fresh economic data revealed a significant drop in consumer confidence, stoking fears of a slowdown in household spending. The pivotal event influencing market sentiment was the release of the Conference Board's September Consumer Confidence Index, which fell to 94.2, its lowest reading since April. This drop was primarily driven by growing pessimism among Americans regarding the job market and persistent inflation concerns. Economists noted that this erosion in confidence could directly translate into reduced spending on non-essential items. Compounding the negative sentiment, the housing market showed further signs of cooling, with home price growth slowing. Furthermore, the looming threat of a U.S. government shutdown added another layer of uncertainty, prompting investors to pull back from sectors reliant on robust consumer spending.
Zillow is up 1.5% since the beginning of the year, but at $71.12 per share, it is still trading 18% below its 52-week high of $86.76 from September 2025. Investors who bought $1,000 worth of Zillow’s shares 5 years ago would now be looking at an investment worth $661.21.
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