HomeAway Incorporated saw a huge surge on its first day after raising $216 million in an initial public offering. HomeAway Incorporated sold its shares at the top end of the marketed range. HomeAway’s shares climbed $13.21, or 49%, to a total of $40.21 on the Nasdaq Stock Exchange. HomeAway Incorporated sold 8 million shares at $27 per share in its IPO on Tuesday.
HomeAway sold nearly 10% of its common stock in its IPO following Mountain View’s LinkedIn Corporation in offering a slightly smaller stake than most internet companies. HomeAway attributed its gain to enthusiasm for a slew of technology IPOs and the small number of shares offered.
According to Pat Becker Jr. of Becker Capital Management in Portland, Oregon, “They’ve done well because of the limited float. There’s just not enough supply to go around, and you see some enormous moves in stock prices.” The closing price values HomeAway at $3.2 billion which is 19 times last year’s revenue. Priceline.com Incorporated has a market value of $25 billion, which is 8.1 times last year’s revenue with Expedia Incorporated valued at $7.8 billion, or 2.3 times last year’s revenue.
Internet companies sold an average of 17% of their outstanding shares in United States IPOs thus year according to data gathered by Bloomberg. CEO of HomeAway Brian Sharples said that his business is different than the recent “rocket ship” internet companies that offered shares to the public due to the fact that it benefits from consistent growth. Property owners and property managers pay in order to list vacation rentals on HomeAway’s site which allows vacationers to search for free.
Over 90% of HomeAway’s $168 million in revenue came from property listings in 2010. Revenue increased $48 million, or 40%, from 2009 to 2010. HomeAway had over 560,000 listings in over 145 countries as of March 31. HomeAway also expects the IPO to increase those numbers by bringing in more customers to its 31 websites. According to Sharples, “Even though we have a great company, most consumers around the world have never heard of the business. Taking the company public really puts the business on the map.”
Source: SFGate.com – HomeAway, vacation-rental site, soars after IPO
