The first part of this is correct; the second part isn't. Rather than earning a profit, Zillow's current situation is the result of the invisible hand of the market correcting its economically-irrational behavior.
Unfortunately those in charge at Zillow didn't feel the real pain -- that went to families trying to find homes, being outpriced by Zillow.
Real pain would be buying an overpriced house that was bid up by Zillow or other similar companies and then needing to move. Missing out on that overpriced sale would actually be great!