(Bloomberg) -- Zillow Group Inc. has had a tumultuous few weeks.
First, the online real estate giant stopped pursuing new purchases in its nascent house-flipping business. Now, it’s rushing to sell down its existing inventory of homes.
Chief Executive Officer Rich Barton is slated to speak on a conference call Tuesday after the company reports third-quarter earnings. The financial world will be watching for comments on the recent moves and their impact on the ambitious effort to transform Zillow into company that uses pricing algorithms for property purchases.
Zillow has been on a roller coaster since Bloomberg reported that the company would press pause on its home-flipping business, Zillow Offers, for the rest of the year. Shares fell 9.4% on Oct. 18, then rallied as investors shrugged off the operational stumble.
Shares plummeted again on Monday after Bloomberg reported that Zillow was approaching institutional buyers with the opportunity to buy about 7,000 homes worth roughly $2.8 billion.
Read more: Zillow’s Move to Offload Homes Is ‘Clear Negative,’ BofA Says
Throughout its 15-year history, Zillow has been best known for publishing real estate listings online and calculating estimated home values -- called Zestimates -- that let users track how much their property is worth. The company’s apps and websites get more than 2 billion page views in a typical quarter, fueling profit in Zillow’s online marketing business.
In 2018, Barton -- who also founded Expedia Group Inc. and jobs site Glassdoor -- pivoted Zillow into a new spin on home-flipping called iBuying that relies on pricing algorithms and armies of contractors to inspect houses and make light repairs.
Zillow has blamed the labor and supply shortages that have plagued the global economy for the slow-down, arguing that it lacked the resources to renovate the homes that it has already acquired.
Through one lens, Zillow’s stumble can be seen as an indicator that customers like its service. On that front, Barton will have strong data to point to. The Seattle-based company probably bought 8,000 homes in the third quarter, according to an estimate by real estate tech strategist Mike DelPrete. That’s more than double the record the firm set in the second quarter, when it bought 3,800.
The company has previously stated that it wants to buy 5,000 homes a month by 2024.
Zillow will also report that it sold more homes in the three months through September than ever before. Total dispositions could top 3,900 homes, generating a $56 million loss before interest, taxes, depreciation and amortization, according to the average analyst estimate compiled by Bloomberg.
Overall, analysts are calling for adjusted Ebitda of $117 million, with profit driven by the company’s online marketing juggernaut, Premier Agent.
Even if Zillow hits those marks, questions remain about what went wrong in the iBuying business and why it’s moving aggressively to sell inventory now.
Another crucial question is whether the company’s push into iBuying has damaged its reputation with consumers. Earlier this year, Saturday Night Live aired a sketch that joked U.S. adults enjoyed browsing the site more than they liked viewing pornography.
But lately the company has been tarred as a large institution meddling in the housing market and accused of making it harder for regular homebuyers.
©2021 Bloomberg L.P.