Shares of online real estate service Zillow more than doubled in their initial public offering on Wednesday, following the same path as other prominent Internet companies that have recently gone public.
Zillow priced its offering at $20 per share on Tuesday night, but demand pushed shares up to $57 upon opening on Wednesday. Shares briefly soared above $60 before settling back to around $38 per share in midday trading.
Zillow’s initial public offering follows filings by a slew high-profile Internet companies such as Groupon, LinkedIn, and Zynga. Some of these companies have continued to excite investors, but not all are successful. Online radio service Pandora has seen its shares fluctuate dramatically since going public on June 14. Pandora’s shares are now trading at $17.60, 10 percent above their offer price.
Founded in 2004, Zillow provides online listings for more than 100 million homes that are either for sale or for rent. The site makes money from advertising, by real estate professionals and mortgage companies, and brands such as phone or insurance companies. The unstable housing market has actually helped the company grow its ad revenue according to CEO Spencer Rascoff.
“I do think Zillow’s revenue is leveraged to a potential recovery,” said Rascoff in an interview with GeekWire. “I believe that we would be even more successful in a more positive housing climate. However, the housing downturn has helped accelerate the migration of real estate advertising budgets from offline to online, and Zillow has been a beneficiary of that migration.”
Although Zillow is still losing money, the company has nonetheless impressed Wall Street. Despite success, Rascoff continues to downplay how today’s IPO will impact the company.
“Over the long-term, what happens to the stock today is pretty much irrelevant,” said Rascoff. “If we delight our tens of millions of users, and thrill our thousands of advertisers, then, over the long-term, the stock price will take care of itself.”
