Zillow's Z ZG decision to demonetize buying and selling properties for the rest of the year prompted a ratings downgrade and 42% price target cut at Wedbush Securities.
Analyst Ygal Arounian lowered his rating on the stock to Neutral and slashed the price target from $153 to $86.
There were a lot of things that were left unsaid in the press release and the announcement about what all this means for Zillow, said Arounian.
On Sunday evening the company announced it would not buy any more homes this year. It would instead work under contract through its existing inventory and properties.
We're operating in a labor - and supply-constrained economy inside a competitive real estate market, particularly in the construction, renovation and closing spaces, said chief operating officer Jeremy Wacksman in the company press release.
Zillow Offers started in 2018. The company buys houses, upgrades them, and put them up for sale. The program accounted for more than half of the company's revenue last year.
On Monday, the stock reacted to news by touching a 52 week low.
This has been a central component of the strategic shift for Zillow in being able to capture the entire residential real estate transaction, said Arounian.
Even pausing it for a couple of months impacts our estimates for the next year in quite material way, said Arounian.
The analyst, along with the others who follow Zillow, are expecting answers during the next quarterly earnings call on November 4.
The timing is a little challenging here. Typically companies are in their quiet period in the weeks leading up to earnings, said Arouonian. I think the next few weeks we're kind of left hanging.