Zillow sued for securities fraud after 17% stock drop on FTC lawsuit

Zillow Group investors filed a securities fraud class action after the stock plunged 17% on an FTC antitrust lawsuit over its Redfin deal.

"The complaint alleges Zillow misled investors by characterizing its agreement with Redfin as a partnership when it was effectively an acquisition of Redfin's business," a partner at Bleichmar Fonti & Auld LLP, the firm that filed the lawsuit, said.

The class action, filed June 17 in federal court, covers investors who bought Zillow Class A or Class C shares between Feb. 11, 2025, and May 7, 2026. The lawsuit claims Zillow failed to disclose that the Redfin agreement exposed the company to materially heightened antitrust scrutiny and that it downplayed its legal exposure after the Federal Trade Commission filed its own antitrust suit. Zillow shares (NASDAQ: Z, ZG) dropped more than 16% on the day the FTC action became public, wiping out billions in market value.

Investors have until Aug. 10, 2026, to petition the court for lead plaintiff status. The lawsuit seeks to recover damages for shareholders who bought during the class period, alleging the company's statements about its business and prospects were materially false. The case adds to Zillow's regulatory and legal challenges as the FTC's antitrust action against the Redfin deal proceeds separately. Rival real estate platforms could face increased scrutiny as regulators examine consolidation in the online listings market.

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