Vacation rental website HomeAway.com just IPO’d at $27 per share, putting a $2 billion valuation on the company. On Wednesday’s trading, it’s price ranged from $34.92 (opening price) to a high of $42.30, closing up 49% at $40.21. Rather impressive for a company that has yet to post a profit:
HomeAway has never posted a profit since its inception and in the three months ended March 31, 2011, the company posted a net loss of $7.5 million on revenue of about $52 million. – Reuters
From an investment perspective, as with many IPO’s, it would be best to wait out the hype and get some concrete evidence that the management team is able to execute in bringing about a profit. That aside, the company’s website HomeAway.com is extremely user friendly, professional looking, and complete with all of the details a potential renter needs. The added value is definitely there. As an investor, in light of price valuations, waiting out a few quarters would probably be the smart thing to do.