Real Estate Wave Helps An IPO Avoid A Tech Wipeout

Agenda-Setting Financial Insight.
Sept. 20 2012 5:11 PM

Real Estate Wave Helps An IPO Avoid A Tech Wipeout

139074993
For the first time in years, home prices, new construction and completed residences are slowly increasing across America.

Photo by Joe Raedle/Getty Images

A real estate wave helped an initial public offering avoid a tech wipeout. Newly listed shares of Trulia, an online property listing service, popped by over 40 percent in their debut on Thursday. That defies the dire dot-com market evidenced by the likes of Facebook and Groupon. The U.S. housing recovery is a good story but Trulia is also still hitched to the Web. 

For the first time in years, home prices, new construction and completed residences are slowly increasing across America. The rebound is helping many boats rise. Since the start of the year, Home Depot shares are up 43 percent, those of paint maker Sherwin-Williams have gained 67 percent and builder Lennar have rocketed 87 percent. 

Trulia benefited, too, by associating itself with the housing market instead of the tech sector. More home sales mean more traffic on its site, more ads from movers to mortgage brokers and more realtors paying to have their picture and phone number pop up next to a new listing. The company’s first-half sales grew by nearly 80 percent from a year ago. 

But the company’s financials reveal its true pedigree. Trulia is valued at about nine times the revenue it should be able to generate this year based on its January-to-June performance. That’s a tech multiple, not anything found in the bricks-and-mortar world of housing. It also has never turned a profit in seven years of existence, a foundation on which only a web IPO could be built. If Trulia can’t swing into the black soon, investors could move the shares into the shabby tech neighborhood.

Read more at Reuters Breakingviews.

Robert Cyran moved from the London office to New York, where he covers global technology, pharmaceuticals and special situations. Rob began his career at Forbes magazine, where he assisted in the start-up of the international version of the magazine.

TODAY IN SLATE

Politics

Smash and Grab

Will competitive Senate contests in Kansas and South Dakota lead to more late-breaking races in future elections?

Stop Panicking. America Is Now in Very Good Shape to Respond to the Ebola Crisis.

The 2014 Kansas City Royals Show the Value of Building a Mediocre Baseball Team

The GOP Won’t Win Any Black Votes With Its New “Willie Horton” Ad

Sleater-Kinney Was Once America’s Best Rock Band

Can it be again?

Technocracy

Forget Oculus Rift

This $25 cardboard box turns your phone into an incredibly fun virtual reality experience.

One of Putin’s Favorite Oligarchs Wants to Start an Orthodox Christian Fox News

These Companies in Japan Are More Than 1,000 Years Old

Trending News Channel
Oct. 20 2014 6:17 PM Watch Flashes of Lightning Created in a Lab  
  News & Politics
The World
Oct. 20 2014 1:50 PM Why We Shouldn’t Be Too Sure About the Supposed Deal to Return the Abducted Nigerian Schoolgirls
  Business
Moneybox
Oct. 20 2014 7:23 PM Chipotle’s Magical Burrito Empire Keeps Growing, Might Be Slowing
  Life
Dear Prudence
Oct. 20 2014 3:12 PM Terror Next Door Prudie advises a letter writer whose husband is dangerously, violently obsessed with the neighbors.
  Double X
The XX Factor
Oct. 20 2014 1:10 PM Women Are Still Losing Jobs for Getting Pregnant
  Slate Plus
Tv Club
Oct. 20 2014 7:15 AM The Slate Doctor Who Podcast: Episode 9 A spoiler-filled discussion of "Flatline."
  Arts
Brow Beat
Oct. 20 2014 9:13 PM The Smart, Talented, and Utterly Hilarious Leslie Jones Is SNL’s Newest Cast Member
  Technology
Future Tense
Oct. 20 2014 4:59 PM Canadian Town Cancels Outdoor Halloween Because Polar Bears
  Health & Science
Bad Astronomy
Oct. 21 2014 7:00 AM Watch the Moon Eat the Sun: The Partial Solar Eclipse on Thursday, Oct. 23
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.