Real-estate web site Zillow (NASDAQ:Z) surged as much as 200% Wednesday as the company enjoys an extremely bullish initial public offering amid a feeding frenzy on Wall Street for new-age Internet stocks.
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Seattle-based Zillow, which provides listings and sales data on more than 100 million U.S. homes, priced its 3.46-million-share IPO at $20 a share late Tuesday. Previously, it had been expected to price between $16 to $18 a share.
But Zillow skyrocketed beyond those levels on Wednesday, leaping more than 200% at the open. It closed Wednesday at $35.77, up 79%.
Zillow is transforming the way people make home-related decisions and connect with real estate and mortgage professionals, both online and on location, with their wildly popular mobile apps," Bob McCooey, a senior vice president at Nasdaqs corporate client group.
Despite its impressive IPO, Zillow has never made a profit, posting a first-quarter loss of $865,000, down from a loss of $2.8 million the year before. However, its monthly traffic has grown significantly, topping 17 million last quarter, and its revenue soared 74% in 2010 to $30.5 million.
Zillow, which was co-founded in 2004 by Rich Barton, the creator of online travel company Expedia (NASDAQ:EXPE), selected Citigroup (NYSE:C) as its sole IPO book-runner.
The strong demand underscores the insatiable appetite on Wall Street for the next generation of Internet stocks. Some believe the valuations placed on these stocks indicate the sector may be in the midst of a mini bubble.
Online music site Pandora (NYSE:P) surged more than 40% in its debut last month despite its lack of a profit and professional network site LinkedIn (NYSE:LNKD) became the largest U.S. Internet IPO since Google (NASDAQ:GOOG) in May at a lofty valuation, especially given its anticipated 2011 loss.
The IPOs of these small and mid-size companies come ahead of the highly-anticipated debut of social-networking king Facebook. Some analysts believe Facebook will garner an eye-popping valuation of $100 billion -- roughly the same size of Amazon.com (NASDAQ:AMZN), which was founded 10 years earlier and is the worlds largest online retailer.