Zillow hit with securities class action after 17% stock drop over Redfin deal

Zillow Group shares fell as much as 17% after a securities class action lawsuit alleged the company hid antitrust risks from its $100 million Redfin agreement.

"Zillow characterized the agreement as a 'partnership' that would provide exclusive access to Redfin's advertising platform, but in truth it paid Redfin $100 million to stop competing," the complaint filed by Bleichmar Fonti & Auld LLP said.

The class action, filed in the U.S. District Court for the Western District of Washington, covers investors who bought Zillow Class A or Class C shares between Feb. 11, 2025, and May 7, 2026. Zillow's Class C stock dropped 16.54% on Feb. 11, 2026, after the company's chief financial officer told investors that legal expenses tied to the Redfin deal would create a 200-basis-point headwind to EBITDA margins in the first quarter. Class A shares fell 17.13% that same day.

The Federal Trade Commission sued Zillow and Redfin in September 2025, alleging the companies violated federal antitrust law. A federal judge in May rejected their motion to dismiss the case. Investors have until Aug. 10 to petition the court to serve as lead plaintiff.

The lawsuit alleges Zillow made false and misleading statements about the nature of its agreement with Redfin, which was announced Feb. 6, 2025. Under the deal, Zillow became the exclusive provider of multifamily rental listings on Redfin's platform and affiliate sites, including Rent.com.

Zillow's stock also declined 4.33% on Sept. 30, 2025, when the FTC filed its antitrust complaint, and another 1.9% on May 7, 2026, after Reuters reported the judge's decision to let the case proceed. A separate multistate lawsuit led by Arizona also targets the $100 million agreement, adding to the regulatory pressure on the Seattle-based real estate technology company.

The class action introduces additional legal overhang beyond the existing FTC case, potentially exposing Zillow to financial penalties and forcing further disclosure of the Redfin deal's terms. Investors will watch for the court's lead plaintiff decision after the Aug. 10 deadline and any developments in the parallel FTC proceeding.

This article is for informational purposes only and does not constitute investment advice.