All concerns about the housing market being in the doldrums were set aside yesterday, as investors scrambled to grab a piece of the hugely successful Zillow real estate website yesterday, as the company’s value skyrocketed to more than $1.6 billion.
Zillow, which has yet to turn over a profit in its seven years of operation, is nevertheless benefiting hugely from an incredible demand from investors eager to get their hands on the latest batch of internet stocks available on the market. The company’s real estate listings service has however become the most popular in the country, with more than 100 million homes listed on its site available to either buy or rent.
This is probably the most significant advantage that Zillow has over other newly available offerings – while the vast majority of other sites floating shares for the first time provide search, gaming or social networking services, they are the only one geared towards real estate. Perhaps this has something to do with why their shares tripled in value from their initial $20 starting price during the first day’s trading on the Nasdaq stock exchange.
Zillow’s IPO comes on the back of flotation’s by a number of other high profile websites, including the LinkedIn professional networking service, Zynga Inc., who are best known for their popular Facebook games Farmville and Caféville et al, and also the Groupon daily deals website.
But while a huge amount of excitement has been generated by these companies and their IPOs, there is no guarantee that the overwhelming attention received on the first day’s trading is going to equal eventual success.
One example is Pandora Inc., who provide online radio services. Since they first went public last month they have seen their share prices fluctuate wildly from one day to the next. Currently they are trading at $17.60, which is just 10% above their original IPO.