Here we go... the first test of whether Internet 2.0 is going to be a real bubble

[c1ue]

I love Zillow.

But Zillow doesn't make money. Any and all supposed profit there is almost entirely due to 'depreciation and amortization'... i.e. credit for past losses. The company probably can survive in the not losing more money sense.

Zillow's updated S1 indicates they're going to take another shot at IPO.

As a company which has lost tons of money, and continues to lose money, with a secular trend against them in their principal market (i.e. real estate), the ability of Zillow to IPO as well as maintain post-IPO valuation will be key to demonstrating whether Internet Bubble 2.0 has any chance of occurring.

http://www.sec.gov/Archives/edgar/da...63050/ds1a.htm

		Year Ended December 31,												Three Months Ended March 31,
		2008				2009				2010				2010				2011
														(unaudited)
		(in thousands, except per share data)
Statement of Operations Data:
Revenues		$	10,593			$	17,491			$	30,467			$	5,331			$	11,260
Costs and expenses:
Cost of revenues(1)			4,198				4,042				4,973				1,162				1,817
Sales and marketing(1)			7,481				9,654				14,996				3,117				5,484
Technology and development(1)			15,048				11,260				10,651				2,534				2,996
General and administrative(1)			5,770				5,501				6,684				1,341				1,828
Total costs and expenses			32,497				30,457				37,304				8,154				12,125
Loss from operations			(21,904	)			(12,966	)			(6,837	)			(2,823	)			(865	)
Other income			687				111				63				17				39
Net loss		$	(21,217	)		$	(12,855	)		$	(6,774	)		$	(2,806	)		$	(826	)
Net loss per share attributable to common shareholders — basic and diluted		$	(0.50	)		$	(0.30	)		$	(0.16	)		$	(0.07	)		$	(0.02	)
Weighted-average shares outstanding attributable to common shareholders — basic and diluted			42,565				42,632				43,162				42,722				45,113
Pro forma net loss per share attributable to common shareholders — basic and diluted (unaudited)										$	(0.09	)						$	(0.01	)
Weighted-average shares outstanding used in calculating pro forma net loss per share attributable to common shareholders — basic and diluted (unaudited)											74,516								76,467
Other Financial Data:
Adjusted EBITDA (unaudited)(2)		$	(12,236	)		$	(4,908	)		$	140			$	(1,183	)		$	1,051

		Year Ended December 31,												Three Months Ended March 31,
		2008				2009				2010				2010				2011
														(unaudited)
		(in thousands)
Reconciliation of Adjusted EBITDA to Net Loss:
Net loss		$	(21,217	)		$	(12,855	)		$	(6,774	)		$	(2,806	)		$	(826	)
Income tax expense (benefit)			—				—				—				—				—
Other income			(687	)			(111	)			(63	)			(17	)			(39	)
Depreciation and amortization expense			8,147				6,407				5,262				1,228				1,526
Share-based compensation expense			1,521				1,651				1,715				412				390
Adjusted EBITDA (unaudited)		$	(12,236	)		$	(4,908	)		$	140			$	(1,183	)		$	1,051

[aaron]

Re: Here we go... the first test of whether Internet 2.0 is going to be a real bubble

I love Zillow.

But Zillow doesn't make money. Any and all supposed profit there is almost entirely due to 'depreciation and amortization'... i.e. credit for past losses. The company probably can survive in the not losing more money sense.

Zillow's updated S1 indicates they're going to take another shot at IPO.

As a company which has lost tons of money, and continues to lose money, with a secular trend against them in their principal market (i.e. real estate), the ability of Zillow to IPO as well as maintain post-IPO valuation will be key to demonstrating whether Internet Bubble 2.0 has any chance of occurring.

http://www.sec.gov/Archives/edgar/da...63050/ds1a.htm

Good find.

I agree with you about them surviving, but being unprofitable. This IPO is nothing but taking money from "investors".

[flintlock]

Re: Here we go... the first test of whether Internet 2.0 is going to be a real bubble

A sucker born every minute.

[aaron]

Re: Here we go... the first test of whether Internet 2.0 is going to be a real bubble

http://finance.yahoo.com/news/Zillow...&asset=&ccode=

Zillow sets IPO at $20 per share in Weds.

Real estate portal Zillow sets IPO at $20 per share; shares set to debut on Nasdaq Wednesday

On Tuesday July 19, 2011, 7:01 pm EDT
NEW YORK (AP) -- Real estate listing and information service Zillow Inc. will sell shares for $20 apiece in its initial public offering Wednesday.
That's $2 higher than the top of the range it predicted on Friday.
The company, based in Seattle, said in a Securities and Exchange Commission filing that it will sell roughly 3.5 million shares, meaning it aims to raise just over $69.2 million through the sale of common stock. It also plans a private placement of about 275,000 common shares, which would raise about $5.5 million more.
That means the company expects to tally about $74.7 million, above the $71.6 million it said it expected to raise on Friday.
In addition, it's giving underwriters the option to buy up to an additional 519,300 shares to cover any over-allotments.
Zillow plans to use the funds for general corporate purposes, including a possible acquisition.
The company will trade on the Nasdaq Global Market under the symbol "Z."
Zillow was founded in 2004 and launched its website in 2006. It has since rolled out applications for accessing its content through mobile devices.
The company holds data on more than 100 million U.S. homes and provides listings for homes for sale and rent. It also features a mortgage marketplace where users can solicit mortgage quotes.
The portal is best known for its "Zestimate," a proprietary home-valuation model it uses to provide an estimate for property values on more than 70 million U.S. homes.
Zillow makes money from real estate and mortgage brokers' subscription fees and advertising.
In the first quarter Zillow's loss narrowed to $826,000 from $2.8 million in the same period a year earlier. Revenue doubled to $11.3 million. Zillow lost $6.8 million in 2010, although revenue jumped 74 percent to $30.5 million from 2009.
Citi is acting as sole book-running manager for the offering. Allen & Co. LLC is acting as senior co-manager and Pacific Crest Securities, ThinkEquity LLC, and First Washington Corporation are acting as co-managers.

[flintlock]

Re: Here we go... the first test of whether Internet 2.0 is going to be a real bubble

All I'll say is the "Zestimates" for my neighborhood can be way off. I hope buyers don't put too much weight on the Zillow price.

[aaron]

Re: Here we go... the first test of whether Internet 2.0 is going to be a real bubble

It is a perfect bubble company, isn't it? It's product is not even any good. They are getting more than they could have hoped for from the IPO price. The true value of the company will eventually be realized, only after the investors cash out. First, FIRE will be paid, then the vulture capitalists, then owners and finally, the initial investors. Wall Street bankers get paid and those "in the know" who can flip their IPO shares at 25 dollars during the first week of trading (on margin, of course) also get paid. Everybody else gets to pay 25 dollars for a company worth, at best $5 dollars per share.



Google had a useful tool for a while. They built real estate listings into the google maps... It was a great service. The REALTORS, MLS, etc. probably released all of their lawyers on that one. bye bye good service.

[don]

Re: Here we go... the first test of whether Internet 2.0 is going to be a real bubble

Zillow Plummets In IPO debut, Yet Reported As 'Soaring'

Yet this was strangely reported as "soaring":

http://www.thefiscaltimes.com/Articl...et#bodyContent

The explanation given is that this was much higher than the theoretical IPO price of $20, but neither you, me, nor anyone in the general public ever had a chance buy it at $20/share. According to that Yahoo graph, the first price any of us could have got it for was about $46, and it would have been a horrible loss for a single day.
http://caps.fool.com/Blogs/fades-of-the-day/617033 has this more honest assesment:

The stock was originally priced at $20.00 a share, however, the stock opened at $60.00 a share. The shares of Zillow stock plummeted as investors took profits right away when the stock began trading at 10:30 am EST.

http://patrick.net/forum/?p=899183

[lektrode]

Re: Here we go... the first test of whether Internet 2.0 is going to be a real bubble

Zillow Plummets In IPO debut, Yet Reported As 'Soaring'

http://caps.fool.com/Blogs/fades-of-the-day/617033 has this more honest assesment:

The stock was originally priced at $20.00 a share, however, the stock opened at $60.00 a share. The shares of Zillow stock plummeted as investors took profits right away when the stock began trading at 10:30 am EST.

absolutely HILARIOUS!
would appear the bullhorn is getting _desparate_ to get a tech-bubbleII pumped up, eh?

my take on zillow?
a fraud machine perpetrated by the NAR (whois the owners?) to induce the unwary into paying more for houses than they might otherwise - in my case - my own fault, admittedly - for trying to buy a house in SLC while passing thru there on way back to HNL, looked like a better bet than the dump we came to look at across the street, esp after seeing the info zillow had on the place - now if i had stuck around long enuf to go thru the dump thoroughly myself, i might've realized just how overpriced it still was, after offering 40% less than it last sold for in 2006 - like i mentioned on a prev post, the 400bux it cost to have a house inspector go thru it for me was cheap money well spent - but attempt to use zillow's 'zestimates' as a tool for valuation? HAHAHAHAHAHAHAHAHA!!!!

methinks that was the main takeaway from the market action on this pig - so far anyway

[c1ue]

Re: Here we go... the first test of whether Internet 2.0 is going to be a real bubble

The explanation given is that this was much higher than the theoretical IPO price of $20, but neither you, me, nor anyone in the general public ever had a chance buy it at $20/share.

Yes, but this isn't anything new.

The whole paradigm was that a large group of investors could have committed (and did commit) ahead of time to pay $20/share, and then the stock price jumped when it was actually available to be bought by the J6Ps of the stock market.

Of course it is almost certain that the opening bell jumps are due at least in part to investment bank and insider manipulation.

For one thing, if for example a company sells 10% of its outstanding stock, the collateral value of the unsold stock gives 10 to 1 leverage to the value of the shares actually on the market.

While for example many executives/employees/founders are not able - either legally or due to market perception reasons - able to sell right away, the market value of their holdings can be borrowed against.

This thus gives a financial motivation to go out and buy some of the 'open' shares, typically sold by VCs and angels recouping at least a portion of their cash outlays. If this collective buying can drive up the price, the 'value' created can then be leveraged back via the collateral of the 90% not public options/shares.

This also applies to companies recently IPO'd - LinkedIn, Pandora, etc etc.

[lektrode]

Re: Here we go... the first test of whether Internet 2.0 is going to be a real bubble

mahalo mr c1ue, as usual you have great insight on this stuff and appreciate your sharing

Yes, but this isn't anything new.

The whole paradigm was that a large group of investors could have committed (and did commit) ahead of time to pay $20/share, and then the stock price jumped when it was actually available to be bought by the J6Ps of the stock market.

Of course it is almost certain that the opening bell jumps are due at least in part to investment bank and insider manipulation.

For one thing, if for example a company sells 10% of its outstanding stock, the collateral value of the unsold stock gives 10 to 1 leverage to the value of the shares actually on the market.

While for example many executives/employees/founders are not able - either legally or due to market perception reasons - able to sell right away, the market value of their holdings can be borrowed against.

This thus gives a financial motivation to go out and buy some of the 'open' shares, typically VCs and angels recouping at least a portion of their cash outlays. If this collective buying can drive up the price, the 'value' created can then be leveraged back via the collateral of the 90% not public options/shares.

This also applies to companies recently IPO'd - LinkedIn, Pandora, etc etc.

[don]

Re: Here we go... the first test of whether Internet 2.0 is going to be a real bubble

In this case the price actually dropped.

The shares of Zillow stock plummeted as investors took profits right away when the stock began trading at 10:30 am EST.

Original non-public price of $20, pumped up to $60 at the opening, drops to $36 with the insider cash out. A neat, shear 'em twice in one shot, lollapalooza.