Saturday, May 14, 2011

Zillow IPO

Recently, Zillow filed with the Securities and Exchange Commission, forms related to a proposed public offering.   With the real estate market still struggling to get out from the recession that hit in 2007/8, a Zillow IPO seems quite strange and certainly badly timed.  Ofcourse the company may just be using this strategically, rather than have actual intentions of floating the IPO sometime soon. 

The proposed $51.8 million IPO has raised hardly any interest in the real estate circles.  The amount seems small for a venture backed company that has raised $87 million since 2004 and and racked up $78 million in losses, according the Erin Griffith of Adweek, .  The article goes on to show how Zillow's revenue model has changed from display advertising to fees and subscription based advertising.  Their focus on Mortgage Marketplace, a subscription based product that connects lenders with borrowers, has added significantly to their revenue.

An interesting perspective from a consumer's point of was was given by Duff Mcdonald of Fortune  According to Duff, Zillow - which was supposed to be a transparent site to help protect consumers is now getting its revenues from real estate agents and mortgage advisers.  How can it remain unbiased and transparent?

I am very eager to see how this IPO will do.   Consumers have been asking for a transparency, which reduces their dependence on real estate agents.    I am all for more power to the consumer!  Will the same Realtors, whose commissions are dreaded, support the ad revenue on the site to make it profitable eventually?  Based on the info available on the site, will buyers and sellers be able to bypass the agent when it comes time to sign the dotted line?  Does Zillow have a strong revenue model?  Will it stand up to competition from,,, and other such sites?  Only time will tell. 
More articles on Zillow

Will you be investing in this IPO?
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