ZillowShares plunged by 24% after company plans were announced. exit the home-flipping businessA failure to accurately forecast housing prices.

Zillow, once considered a winner in the pandemic because of its centrality in the red-hot housing market has seen its stock drop by two thirds since February. It is now trading at its lowest point in 16 years. Zillow’s core internet market continues to grow and generate cash. reportedA net loss in third quarter of $328million was reported on Thursday by the company’s instant buying (or iBuying) unit.

On an earnings call Rich Barton stated that Zillow would be closing its iBuying business, which it is competing with OpendoorIn a move to reduce 25% of its workforce, Zillow joined the company in late 2019, with hopes that it would use its massive data sets and popular marketplace to make a profit selling and buying homes in large volumes.

This was once a boon, but it quickly became a money pit.

Barton explained that Zillow Offers scaling up was “too risky, volatile to earnings and operations and offers too low a return of equity opportunity, and too limited in its ability serve customers.” “We have not been able to accurately predict future home prices in either direction by any greater than the model we created.”

Particularly, Zillow’s ability to predict the future was shaken by the pandemic. After a period of quiet in the housing market, prices rose as people moved to areas they found more appealing due to the slowdown in activity and closing of office buildings. The prices of homes rose, setting new records in several markets across the country.

Zillow sold homes for a higher price than it bought them. The company also increased its home buying. Zillow’s iBuying allows homeowners to instantly sell homes for cash, rather than through a broker who would have to deal with lengthy bidding and closing processes. Zillow will invest money in the repairs and maintenance of a house after it is purchased. However, they aim to make a profit even after taking into account all costs.

As the labor market became tighter, supply chain bottlenecksZillow suffered from rising supplies costs, which led to a shrinkage of its margins. The company was left with a market for housing that had stagnated or stopped growing at the pace Zillow anticipated, and it found itself in an underwater pool.

Barton explained that the company is now unable to trust its pricing model. It’s better to get out than risk the entire enterprise.

“What it boils down to is our inability to have confidence in pricing in the future, enough confidence to put our own capital at risk,” he said on the call.

AnalystsThe stock was swiftly downgraded by the company on Friday.

BTIG lowered its rating from neutral to “Can’t justify buy w/o iBuyer” in a report. Piper Sandler also made the same decision to the recommendation it had in “ZOffers Mothballed,” stating that the company is returning “to its roots” as an asset-lite business model.

KeyBanc, Stifel Nicolaus, and KeyBanc made similar plays to maintain the equivalent of Zillow share hold ratings. Stifel’s headline for its note was “From flipping or flopping”, while KeyBanc used “Flipping is not a good idea.”

Zillow had to write down $304 Million in third-quarter earnings due to the “unintentional purchase of homes at higher prices that our current estimates are for future selling price,” according the earnings statement. Zillow reported that it had purchased 9,680 properties and only 332 homes were sold.

Zillow expects another loss for the fourth quarter. It recognizes write-downs of inventory that it has already purchased, between $240 and $265 millions, and impairment and restructuring costs up to $230million. This will continue into the next year as Zillow winds down its Offers business.

Barton spoke with CNBC’s closing bell on Thursday. He acknowledged that there had been many who said he should not get involved in the home-buying industry and that Zillow needs to remain focused on its online market.

He said, “I’m certain there are some out there waving their fingers at me right here,” And they are right.

WATCH: Zillow CEO on quitting home-flipping business