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NEW YORK (TheStreet) — Zillow may not be the biggest offering this week, but it certainly has the most buzz.
Originally, the online real estate valuation Web site planned to raise $45 million, but that has since been increased to $59 million. The price range has moved to $16-$18 per share from from $12-$14. Zillow was the third most popular site in the real estate category in May, according to Inman.com.
Investors are hoping for the same type of positive gains seen in the recent Homeaway (AWAY_)offering, which is up 53% since going public, and IPO Desktop President Francis Gaskins says it’s the pick of the week.
Zillow’s earnings come from real estate and mortgage professionals as well as advertising. The company sells subscriptions to agents and has recently begun an agent review and rating tool. Zillow is also recognizing revenue from its strategic partnership with Yahoo’s(YHOO_) real estate web site. Zillow provides the real estate listings for the Yahoo site and expects to see increases in marketplace revenues as a result of the partnership.
Revenue should grow from increases in website traffic, which has risen sharply since the company’s launch in 2008. For the past three Decembers, monthly unique views have increased 48% in 2008, 38% in 2009 and 66% in 2010. It’s possible that some of the investors in Homeaway may see this proven track record and wonder whether Homeaway is overvalued.
China Xunlei is the next in a long line of Chinese Internet IPOs. The company has working on a $114 million offering in the price range of $14-$16 per share. Its product Xunlei Downloader is a download accelerator application in China that has a 78% market share. It is used in approximately 138 million downloads a day. It also provides online streaming video and its Xunlei Kankan is the third largest video streaming portal in China. The company has a range of 110-140 million unique visitors per month.
A vote of confidence in China Xunlei is coming from Sohu (SOHU_), which is picking up $10 million worth of stock in a private placement and must keep its shares for 180 days.
Unfortunately, this stock has some negatives as well that could cause investors to be cautious. The company stated that it has a “material weakness” in its accounting system, which it expects to rectify by the end of 2012. Gaskins is concerned over the length of time to fix the problem and what exactly this weakness is. He points out that since March, five Chinese companies have been delisted and 15 suspended. Plus, most of the stocks have performed poorly, of the 52 new companies, only eight have gains.