Zillow Stock Climbs 79 Percent in Action-Packed First Day of Trading
Zillow’s stock ended a roller coaster ride of trading on Wednesday, its first day as a public company. The Seattle-based online real estate listing company’s stock traded as low as $32.50 and as high as $60, but ultimately posted a 79 percent gain, finishing the day at $35.77. Zillow (NASDAQ: Z), by pricing its shares at $20 yesterday for certain institutional investors, ended up raising about $75 million in cash proceeds from the IPO and a private placement with previous investors.
Zillow’s IPO ends a roughly yearlong drought for Seattle-area tech companies going public—the last was Bellevue-based Motricity (NASDAQ: MOTR), which had to cut its price and share offering before selling shares. And even that wasn’t a totally home-grown affair, as Motricity arrived in the region from North Carolina after purchasing a piece of InfoSpace.
And Zillow likely won’t be the last, with RFID maker Impinj already filing an investor prospectus with the SEC to go public. PopCap Games also was talking about an IPO earlier this year, but wound up being gobbled by Electronic Arts to help the large game-maker continue its digital games expansion.
It’ll be interesting to see how Zillow’s IPO affects the local tech entrepreneurship scene. With an infusion of capital, the company has the ability to work with smaller startups that could partner with or even be acquired by the larger publicly traded company—a key to building the local startup scene that we recently covered with Ignition Partners’ Frank Artale. The IPO also delivers some wealth, at least on paper, to the founders and employees, possibly increasing the ranks of angel investors around the area.
Nationally, Zillow is being seen as a measure of the appetite for mid-range tech companies. Zillow is not profitable yet, but is narrowing its losses, from about $12.9 million in 2009 to about $6.8 million in 2010. Revenue almost doubled last year, to about $30.5 million.
Of course, that’s nothing like the roughly $250 million in revenue for recent consumer web IPO LinkedIn, or the $600 million in revenue posted by social game powerhouse Zynga, which is preparing for an IPO. But as we discussed previously, there’s something to be said for a real-estate focused company like Zillow being able to even reach the IPO threshold after the historic housing meltdown this country has been through the past three years.
In a blog post, CEO Spencer Rascoff said the company is “still in the very early days at Zillow in our quest to give people an edge in real estate. We view today’s milestone as, quite simply, a stepping stone towards greater things to come for our users, our partners, and our team.”