Zillow going public
Just two months ago, real estate search company Zillow.com filed for IPO status with the U.S. Securities and Exchange Commission and immediately entered what is commonly referred to as the “quiet period” during which the SEC reviews their filed S-1 papers and Zillow cannot influence the market, thus must remain quiet.
Today, Zillow filed “Amendment 5 to the S-1” which outlines the basics of their pending IPO. 3,462,000 shares under the NASDAQ symbol “Z” will start at $12 to $14 per share meaning the total valuation is $378 million.
Zillow seeks to raise upward of $55 million in the IPO. Zillow’s traffic has increased substantially between 2010 and 2011 and they claim 1.7 million homes are viewed via mobile devices every 24 hours. Revenues have also grown since 2008 although income has been on the decline. Thus, the seeking of funding through IPO.
Given that tech companies that have recently gone IPO do not have consistent performance, it will be interesting to see how Zillow performs when the SEC grants them public status.
Zillow is relying on you, Realtors
The filing does, however, admit that Zillow has “incurred significant operating losses in the past and we may not be able to generate sufficient revenue to be profitable over the long term.” The Amendment also notes that one risk is “if real estate and mortgage professionals or other advertisers reduce or end their advertising spending with us and we are unable to attract new advertisers, our business would be harmed.” Zillow is reliant upon you to buy advertisement, but if you stop, so does their business.
Meanwhile, during the quiet period, Zillow cannot defend itself when competitors speaks out against them publicly, nor can they make comment to any news outlet about the filing, rather must point to the public filing. They do, however, note in the filing that there are three primary industry challenges they must contend with: (1) a “highly fragmented, local and complex market,” (2) “absence of consumer orientation,” and (3) “increasing role of the internet and mobile technologies.”
Zillow’s Amendment 5 filing is subject to change, however, as it is a preliminary prospectus not meant to be an offering for sale (in other words, the SEC has not yet approved the filing).