Trulia IPO Filed for $75 Million – Smart, or Risky, Business?

by Chicago Agent


Prominent real estate website Trulia filed for an IPO late last week, but its actions have raised more questions than they’ve answered.

By Peter Ricci

One year after Zillow became the latest tech darling on the NASDAQ, the Trulia IPO has been officially announced for $75 million.

Taking advantage of a new provision in the JOBS Act that allows midsize companies to forgo standard SEC operating procedure in order to secure public funding, the Trulia IPO includes such luminous underwriters as JPMorgan, Deutsche Bank and RBC Capital Markets.

Trulia IPO – In the Name of Expansion

In a 24/7 Wall Street piece on the Trulia IPO, the website stated that it had several purposes in mind for the additional funds, including:

  • Working capital and general corporate purposes.
  • Acquire or invest in: complementary businesses; products; services; technologies; or other assets.

Operating at a Loss

Trulia has stated there are 63.9 million outstanding shared in the company, with 12 million additional options, with the price hovering between $1.43 and $5.51 per share. Interestingly, though, the company has actually reported losses in the last two years, with its 2011 operating loss totaling $6.16 million and $7.64 million in just the first six months of 2012.

CBS News piece by Erik Sherman pointed out that since Trulia started, it actually has not turned a profit, and that Trulia may be betting on the IPO investor cash as the major push it needs to enter profitability, ie what happened with Zillow’s IPO. There are still some areas of concern, though; Sherman writes:

  • Though Zillow was operating at a loss when it went public and is currently profitable, it had an ace in the hole for its IPO – it was decreasing its losses with time; Trulia, on the other hand, has increased it losses, as its sales and marketing costs have ratcheted up with its expansion efforts.
  • Trulia may be thinking that with how housing has bottomed, its services will be utilized by more and more real estate professionals; however, as the continued woes of Facebook, Zynga and our own Groupon demonstrate, investors are getting leery with tech companies.

There’s also the issues with management. As the always entertaining Felix Salmon argued in his modestly titled piece for Wired, “For High Tech Companies, Going Public Sucks,” once tech companies go public, they often abandon the unorthodox approaches that made them exciting in the first place. Will that happen with the Trulia IPO? We’ll find out!

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