Even though the company has never actually turned a profit, Zillow Inc.’s initial public offering (IPO) yesterday led to the company being valued, at one point, at $1.6 billion[1]. Shares were initially offered at $20, but closed the day trading at $35.77[2]. Despite the country’s weak real estate market and Zillow’s real estate related services, investors found the company appealing because it fits in with the demand for technology IPOs, something still “relatively scarce” in the market, said analysts.

“Investors are desperate for what is growing,” said CEO of PrivCo Sam Hamadeh, adding that “the only thing that’s growing are internet companies.” Zillow ended the day with a market value of $623 million and ended up as the third most successful Wall Street Debut in 2011 behind Chinese internet firm Qihoo 360 Technology and LinkedIn. Zillow is currently the third most popular internet real estate site behind Yahoo Real Estate and Realtor.com. Interestingly, Hamadeh does not share in the investor enthusiasm for Zillow, noting that he personally believes that Zillow is “absolutely the wrong company to go public” given its net losses and what he views as an inability to grow virally.

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[1] http://www.boston.com/business/markets/articles/2011/07/21/real_estate_site_zillow_jumps_on_ipo/

[2] http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/07/20/MNQI1KD20M.DTL