Cathie Wood Bought $25 Million Of Zillow On Tuesday Before The Stock Cratered Another 20% Today

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by Tyler Durden
Wednesday, Nov 03, 2021 - 06:45 PM

The patron saint of BTFD is officially back and doing what she does best: scooping up shares of absolute garbage companies failing-to-perform companies underperforming companies "bargains".

The market's garage sale item of the week this week was shares of Zillow, which saw a nasty spike lower in trading on Wednesday after the company announced earlier in the week it was going to be shuttering its home flipping business.

As a result of Zillow's grandiose failure, Wood decided to "strategically" deploy $25 million worth of capital from her flagship ARKK fund to buy more than 288,000 shares of the company as it fell 10% on Tuesday.

Zillow said its "algorithmic model to buy and sell homes rapidly didn’t work as planned," according to the Wall Street JournalSo much for innovation...

Apparently Wood's BTFD algorithm may have also glitched, as Zillow shares fell another 23% in trading on Wednesday. It's now down about 50% for the year, the WSJ notes in the same article where they refer to Wood as a "star stock picker". 

We were far ahead of the coming news from Zillow. Four weeks ago we reported that Zillow's electronic house flipping operation had been underperforming - as the real estate company had been buying houses at inflated prices and flipping them for a loss.

In Phoenix, Arizona, we reported at the end of October - Zillow's second-largest portfolio after Atlanta - things were worse than we thought. According to an analysis by Insider, 93% of the homes Zillow bought to flip were now listed at less than what they paid, we noted days ago. 

We were even prescient enough to place the blame on Zillow's AI, since home prices in Phoenix have been holding up for the year. We wrote on October 31:

In short, Zillow is having issues clearing out its existing inventory and just needs it moved. As Insider notes, if the company sold all of it's Phoenix homes right now at their current list prices, it would lose $6.3 million dollars. Right now, their median loss per home in the area is nearly $29,000.

Given that the Case-Schiller index indicates Phoenix real estate is still on fire, this may simply boil down to Zillow's out-of-control 'AI' getting off on outbidding plebs in a greedy bet on unlimited growth.

Zillow isn't the first bottom-fishing expedition Wood has embarked on this year, either. Recall, Wood also recently "bought the dip" in shares of Robinhood while the equity was in the $40's. It has since fallen below its IPO price of $37 on the heels of an ugly Q3 report.