Zillow Inc.’s initial public offering is due to price today, and while important news for Zillow, many smaller dot-com companies will be watching anxiously to see how much interest is raised.
Estimates put the value of as Zillow, which had first-quarter revenue of $11.3 million, at around $460 million. In comparison other recently floated companies such as LinkedIn Corp., HomeAway Inc and Pandora Media Inc all had valuations in excess of $2 billion when they first started trading, and quarterly sales figures exceeding $50 million.Only a few companies worth less than $500 million have held IPOs this year, and the majority have seen their shares lose value.
Zillow, which was founded in 2004 by Rich Barton and Lloyd Fink, expects to raise around $62.3 million through its IPO. It makes money by selling subscriptions to mortgage and real estate professionals, and by selling advertising on the site. The site has a database of around 100 million homes in the US that can be browsed by potential renters and buyers who can then connect with real estate agents.
One of the companies that will be watching the IPO closely is San Francisco-based competitor Trulia Inc. who has already thought about going public.
Back in the 90s there were far more companies of Zillow’s size going public, but nowadays many of those who would have previously invested in companies valued at less than $500 million wouldn't take the risk.