Zillow Mid-Sale iBuyer Inventory

Rich Barton, CEO of Zillow (Getty Images, iStock)

Zillow’s disastrous foray into iBuying may finally offer investors a ray of hope.

Shares of the company skyrocketed Friday, a day after the company said it had signed contracts to sell more than half of the homes it raised through Zillow Offers, the iBuying unit it was supposed to shut down last month. Zillow also said it will repurchase $750 million of its shares and increased its estimate of fourth-quarter revenue for the unit that includes iBuying by more than a third.

Zillow Offers was poised to sell nearly 18,000 homes by the end of the third quarter, with 9,790 in inventory and another 8,172 in contract. It’s unclear how many homes it owns now, because Zillow has demolished at least 400 contracts despite previous promises to honor those agreements.

The company said it sells homes through bulk deals with institutional investors, such as Pretium Partners, who agreed to buy 2,000 properties, as well as deals with individual home buyers. Zillow raised its fourth-quarter estimate for the housing unit to a range of $2.3 billion to $2.9 billion, from $1.7 billion to $2.1 billion.

Zillow said it expects the closing of iBuying to be “cash-flow neutral” given Zillow Offers’ inventory, operating and restructuring costs and $2.9 billion in secured debt.

Still, CEO Rich Barton said it was “an opportune time” to say it will repurchase $750 million worth of Class A and C shares as more money comes in than expected. The buyback will allow the company “to reduce the cash balance we have built up to support Zillow Offers,” Barton said in a statement.

Zillow shares fell 43 percent in the past two months as the company paused and then closed Zillow Offers. Shareholders have filed at least two lawsuits to gain class-action status, accusing Zillow of misleading investors.

The stock rose 9.1 percent to $58.64 as of 2:33 p.m. EST.