A sold sign is posted outside a home in Springfield, Ill., that's been sold.Seth Perlman
The volatility of recent initial public offerings hasn't dented the enthusiasm among investors for other stocks on their first day of trading. On Wednesday, Zillow Inc. surged in early trading, opening at $60 (U.S.) - or triple the IPO price of $20 - before settling back to about $35 in midday trading.
LinkedIn Corp. made a similar debut earlier this year, popping to a high above $122 on its first day of trading, before the enthusiasm began to subside. Early-early investors who were able to get in on the IPO before the shares hit the open market have done very well, of course. Others, not so much. The shares fell to $60 in June, but have since rebounded impressively.
Meanwhile, the poor soul who bought Zillow at $60 early on Wednesday is now nursing a loss of more than 40 per cent in just a few hours, underling the incredibile volatility in some IPO issues as investors alternatively jostle for ownership and try to make a quick buck.
The company, which provides online real estate listings in the United States, might be tapping into the recent reborn enthusiasm for Internet-related stocks and has taken a similar approach to other companies when going public.
It has limited the number of outstanding shares to bump up the demand among investors. Through its IPO, Zillow issued just 3.5 million shares, raising $69.2-million in the process. With the rise in the share price in the morning, though, the company was valued, if only briefly, at more than $2-billion.
David Berman