Real estate search firm Trulia (TRLA) kicked off life as a public company with a bang.
Trulia's stock opened 30% above its IPO price when it started trading on the New York Stock Exchange Thursday morning. It quickly gained momentum, rising as high as $25 (47% above the IPO price).
Late Wednesday, Trulia's underwriters, J.P. Morgan (JPM) and Deutsche Bank (DB), sold 6 million shares at $17 apiece -- above the estimated range of $14 to $16. That gave Trulia $120 million of working capital.
The stock surge isn't surprising since demand for the IPO was robust. "It was double digit times oversubscribed," said Scott Sweet, founder of research firm IPOBoutique.
Investors are betting that Trulia, which runs a co-branded website under a partnership with CNNMoney, will follow the high-flying trajectory of rival Zillow (Z). Since Zillow went public in July 2011, its share have more that doubled from its IPO price.
"People are thinking of Trulia as a bargain compared to Zillow," said Sweet. Research firm PrivCo said in a research note that Trulia is a relative bargain because its IPO was priced at just 7 times its 2012 revenue compared to Zillow pricing at 14 times its revenue in 2011 right before its IPO.
Although Trulia's revenues have nearly doubled every year since it was founded in 2009, it has yet to turn a profit.
While the comparison with Zillow may be boosting Trulia's worth in the eyes of investors, Zillow is pushing back against its rival. Last week, it filed a patent infringement lawsuit accusing Trulia of using Zillow's home valuation software.
While that didn't dampen investor interest in Trulia, Zillow's shares were down more than 2% in early trading.
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