Wednesday, July 20, 2011

Zillow (Z) Continues Trend of Nonsense IPO Valuations for Internet Stocks

While Zillow (Z) is a nice utility on the internet, we are seeing complete and utter nonsense in a stock market starved for domestic growth stories.   After upping its IPO price from $12-14 to $16-$18... and then $20 this morning - the stock opened around $47 (maybe one print at $60?) and has gone on to ruin any retailer investor participating to the tune of currently sitting at $34.

Winners? Those institutions given the shares at $20 who can flip to the retail crowd.  Great to be 'smart money'.
  • The company has a history of losses, spanning the past five years. In 2010, it lost $6.8 million on revenues of $30.5 million, and in the first three months of 2011, it lost $826,000 on revenues of $11.3 million. 
This morning the company was valued at some $1 Billion plus, for annualized revenue of $45Mish.  Even with the drop into the mid $30s, it's still outlandish on even price to sales.

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