Why Is Zillow So Sexy?

Zillow's (Nasdaq: Z) open house this morning couldn't have gone better.

The real estate website that just a few weeks ago was looking at an IPO price of as low as $12 a share went public at $20, and that still wasn't enough. The stock more than doubled at the open, spending most of the morning in the $40s.

With 27.5 million shares outstanding after underwriters exercise their overallotment option -- and they will -- Zillow commanded a market cap of $1.2 billion at the open.

If residential real estate is dead, why are so many people snapping up Zillow?

It's all about growth. Realtor.com parent Move (Nasdaq: MOVE) saw its revenue slide 7% to $197.5 million last year, and Wall Street is valuing it as a $400 million company. Zillow posted a small deficit on only $30.5 million in revenue, but today's investors consider it to be three times as valuable because its top line surged 74% last year.

It also doesn't hurt that Zillow's growth is accelerating. Revenue climbed 111% during the first three months of this year.

As hot as some market debutantes have been lately, it's still rare to see a stock more than double out of the gate. Let's look at some of the biggest pops so far this year.

Source: Hoovers.

Zillow will need to justify today's pop. Of the four biggest gainers at the open before Zillow raised the bar, only corporate-social-networking site LinkedIn is currently selling higher than its opening trade.

Zillow's model of serving up free ad-supported pages and getting real estate agents to pay up for premium access is a scalable one, but it will be up to Zillow to grow quickly enough to justify its $1.2 billion price tag.

It's a great-looking house, but it appears as if the owners are asking a bit too much right now.

Will you buy or pass on Zillow's IPO? Share your thoughts in the comments box below.