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Zillow to go public at $20 a share

July 19, 2011 |  4:25 pm

If Zillow Inc. were a three-bedroom Colonial on a cul-de-sac, how much would it be worth?

The online real-estate and home-valuation firm offered its estimate of itself late Tuesday, pricing its initial public stock offering at $20 per share, thus valuing the company just shy of $540 million.

Zillow raised $69.2 million by selling almost 3.5 million shares, which will begin trading Wednesday on the Nasdaq Stock Market under the ticker symbol “Z.”

Though much smaller than the likes of LinkedIn Corp. and HomeAway Inc., Zillow is another example of investors’ thirst for Internet-related IPOs. After setting an initial price range of $12 to $14, Zillow raised that to $16 to $18 last week.

Zillow Still, Nitsan Hargil, research director at GreenCrest Capital in New York, doesn’t expect Zillow to match the furious debut of LinkedIn, which more than doubled on its first day of trading in May and hit a new high two days ago.

“This is a much lower-key company than LinkedIn,” Hargil said. “It’s a much smaller company, and I don’t think there is capacity for that sort of frenzy around this name.”

Zillow faces several obstacles, including its low market share and lack of profitability.

It controls less than 6% of the Internet real-estate market, according to Hargil, although no firm is dominant and there’s plenty of room to seize that mantle.

Zillow reported a net loss of nearly $6.8 million last year and $826,000 in the first quarter. Hargil expects the company to become profitable in the third quarter and to notch earnings for the year as a whole.

In a less frenzied environment, Zillow might have delayed an IPO until it had solid earnings but chose to strike when it could.

“With the market being as accepting as it is of IPOs, this is a very attractive time to go public,” Hargil said.

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-- Walter Hamilton

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