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Trulia goes public, sees 30 percent bounce

(MoneyWatch) Real estate site Trulia (TRLA) had its IPO today and saw the share price take an immediate 30 percent jump. The results offer a strong contrast to the experience investors have had with Facebook (FB) and suggest that tech IPOs can still be strong for the right kinds of companies.

The opening price of $22.10 was well above the $17 share price the company set for institutional investors and other IPO insiders. That number, in turn, was over the expected $14 to $16 range. Zillow (Z), a competitor that went public in July 2011, fell about 1 percent to $45 during the Trulia IPO, but its stock is still more than double its $20 per share opening price.

Trulia contrasts strongly with Facebook, whose stock, while having recovered some, is still down more than 40 percent from its IPO in May 2012. The two companies differ in a number of ways:

  • Facebook was probably the most hyped stock in tech history, opening with a $104 billion market valuation, even though its sales were only a few billion, creating a large sales to value ratio. Trulia's market valuation is roughly $448 million, or only 8 times its previous 12 month revenue of $51.
  • Facebook sold nearly 18 percent of its stock when it went public. That was a big chunk, getting the company caught on the bad side of the law of supply and demand. With many shares available and further amounts hitting the market this fall, the larger supply hurt the demand. The total number of shares Trulia and early investors were selling was 6 million. A smaller supply helps to keep interest -- and prices -- up.
  • Facebook is the ultimate social networking company and was really a first -- a test of how investors would react. But Zillow had preceded the Trulia IPO, setting some expectations. Furthermore, real estate is a long understood industry with established business models and proven abilities to generate revenue.

Even though Trulia has yet to show a profit, there was less hype, less speculation about whether there were ways to make money and less risk for investors.

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