Analyst Ygal Arounian lowered his rating on the stock to Neutral and slashed the stock's price target from $153 to $86.
"There were a lot of things that were left unanswered in the press release and the announcement about what all this means for Zillow," said Arounian.
On Sunday evening the company announced it would not purchase any more homes this year. It would instead work through its existing inventory and properties under contract.
"We're operating within a labor- and supply-constrained economy inside a competitive real estate market, especially in the construction, renovation and closing spaces," chief operating officer Jeremy Wacksman said in the company's press release.
Zillow Offers was started in 2018. The company buys homes, upgrades them, and then puts them up for sale. The program accounted for more than half of the company's revenue last year.
The stock touched a 52-week-low on Monday in reaction to news.
"This has been a central part of the strategic shift for Zillow in being able to capture the entire residential real estate transaction," said Arounian.
"Even pausing it for a couple of months impacts our estimates for the next year in quite a material way," said Arounian.
The analyst, like the others who follow Zillow, are expecting answers during the company's next quarterly earnings call on November 4.
"The timing of all this is a little bit challenging. Typically companies are in their quiet period in the weeks leading up to earnings," said Arounian. "For the next couple of weeks we're kind of left hanging."