Well there is a lot more that needs to be said and just a few points are mentioned below. The cash has been burning a hole in Z's pocket and they must have spent close to $50M on a motley bunch of overpaid acquisitions in the last 3 months. Of the remaining $238M, the shareholders lawsuit claims that Zillow raised $156M on September 6th based on an artificially inflated stock price according to the complaint filed against Zillow and certain named officers, who also pocketed $103M between them.
Just so that any unassuming investor doesn't know about this, I have attached the Yahoo URL when the class action was filed which summarizes the federal securities violations that Zillow has been accused of by shareholders.
This action is hanging over Zillow like the sword of damocles, and whatever the outcome it will be seriously damaging to Zillow and its executives. The question is whether CEO Spencer Rascoff and CFO Chad Cohen can survive the fallout of the allegations when they described the Shelf Offering as "good housekeeping", followed by an unseemly haste to float the shares. Not sure how the SEC letter dated August 23rd to Zillow requesting clarification of accounting treatment impacts on this, but I am sure questions about disclosure of the SEC investigation will be asked in the court case, and if Advisors to the shelf offering were made aware of the SEC interest. Lots of interesting issues here.
-- must have spent close to $50M on a motley bunch of overpaid acquisitions
They did that with shares, not cash. And that's fine. My only 2 cents is they could have done it with LESS dilution 4 months ago when the stock was in the 40's (yes, they have a crystal ball).
Per the lawsuits, just leeches of capitalism ... Z getting targetted is not unique.
Per the float, that sword cuts both ways. Fast pops, fast drops, adjust your level of risk accordingly.
That all said, a billion$ is a pretty rich valuation .... that's a LOT of money for a web site. And right now Zillow is playing a whack-a-mole strategy to generate monetizable Leads for the brick & mortar mortgage category. And those guys would all jump ship on Z if something cheaper or less beholden comes along. And therein lays the challenge for Zillow .. to continue to deliver on game changers that include new sources of revenue, cements meaningful partnerships, and builds a better "value connection" to consumers.