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
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.
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.
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