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Zillow Falls on Plan to Raise $1 Billion in Stock and Notes

Zillow's capital issuance announcement comes days after it reported strong earnings for the first quarter.

Shares of Zillow Group  (Z) - Get Zillow Group, Inc. Class C Report fell in premarket trading Tuesday after the real estate services company announced plans to raise $1 billion in stock and convertible debt.

Zillow said that it will issue $500 million of Class C common stock and $500 million of convertible senior notes due 2025.

The company intends to use the proceeds to repurchase a portion of its outstanding 2% convertible senior notes due 2021 and for general corporate purposes, it said in a statement.

Zillow waxed very enthusiastic last week in its first-quarter earnings report, despite the coronavirus pandemic. Revenue soared 148% in the quarter from a year earlier.

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That gain was “driven by increasing Zillow Offers sales velocity and strong performance in the Premier Agent business, despite headwinds in March because of the coronavirus pandemic,” the company said in a statement.

“During Q1, we learned the true value of home. We also learned real estate is resilient as we’re seeing clear signals that people are still shopping for homes and want to move,” Zillow CEO Rich Barton said in the statement.

“Our Q1 results met or beat our outlook on all measures despite some volatility in the second half of March. We started the year strong, coming off a solid 2019 and ended the first quarter with an even stronger balance sheet, including a record cash balance. There is light on the horizon.”

Zillow shares stood at $54 in premarket trading, down 3.16%. The stock has gained 10% in the last three months, with all of that and more coming since the May 7 earnings report.