Trulia Inc. (TRLA), the first initial public offering in over a month, is making quite a debut after opening higher by 30% on the New York Stock Exchange this morning. Shares of the online real estate listing company opened at $22.10 after pricing at $17 a piece last night; above the targeted range of $14 - $16. In IPO filings the company reported a loss of $7.6 million on revenue of $29 million in the first half of the year.
Though they're not turning a profit yet, user growth and the number of visitors and subscribers remain promising and today's over 40% rise underscores that sentiment. Not only is this an upbeat sign for the IPO market, it could mark improved confidence in the real estate market.
"I think a lot of it is Bernanke pushing out rates all the way to 2015," says Jon Najarian, co-founder of TradeMonster.com, in the attached video. But, he adds, there is real demand for housing for those who can secure mortgages.
That demand has been showing up in the Homebuilders ETF (XHB), which is up 50% this year, and 79% from one year ago. And Trulia's main competitor, Zillow (Z), carried out a successful IPO in July 2011 and has seen shares more than double this year alone, currently up 104%.
Najarian has long positions in Lennar (LEN), D.R. Horton (DHI), and Pulte Homes (PHM), and despite strong gains already, still likes the homebuilders moving forward.
"As far as Zillow versus Trulia, I think Zillow is moving to the upside because the more people are going to use these websites, the better chance that we are seeing that [housing] recovery," he says. "If indeed Trulia is able to do the same, then I think we're going to see a turnaround in housing that's very strong."