It's all about location, location, location.
Trulia (NYSE: TRLA ) priced its IPO at $17 a share last night, just above its earlier range of $14 to $16.
It wasn't enough. The stock opened at $22.10 shortly after this morning's opening bell.
It's a good time for a growing real estate website operator to go public. The housing market is finally showing signs of life, and larger rival Zillow (Nasdaq: Z ) has more than doubled since last summer's IPO at $20. Bankrate (Nasdaq: RATE ) -- the popular aggregator of mortgage rates and other interest rate information -- hasn't done as well. It's barely trading above last year's $15 debut, but at least it's not a busted IPO like so many of the other ballyhooed dot-coms that have crashed and burned over the past year.
Trulia isn't perfect. It has yet to turn a profit, but it's certainly growing. Revenue climbed 91% in 2009 and 95% to $38.5 million last year. Revenue growth decelerated to 78% through the first half of this year, but that's obviously not too shabby. The lack of profitability may be a deal breaker to some investors, but that's nothing that a few more quarters of heady growth won't remedy.
With 26.3 million shares outstanding after this morning's IPO, Trulia opened with a valuation of roughly $580 million. In other words, it's already worth more than Realtor.com parent Move (Nasdaq: MOVE ) , and real estate lead generator Market Leader (Nasdaq: LEDR ) .
Zillow is valued at a little more than double Trulia's market cap, and rightfully so. Zillow is bigger and growing even faster than Trulia. Oh, Zillow is also profitable.
Trulia's success this morning should've given a boost to the market's perceived value of Zillow, but that didn't happen. It will, as long as Trulia can sustain its IPO premium. Sector investing is a lot like real estate. If a pretty house moves into the neighborhood -- and Trulia certainly qualifies -- the value of the neighboring houses should start to rise.
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