Last week, HomeAway shares started trading on the Nasdaq Stock Market under the symbol AWAY. They sold 8 million shares at $27 apiece, and eventually the shares climbed $13.21 (49%) to $40.21. HomeAway were able to raise $216 million through the IPO.
HomeAway only sold about 10 percent of its common stock in its IPO, following the same strategy as LinkedIn in offering a smaller stake than most Internet companies. Enthusiasm along with the scant number of shares offered is believed to have contributed to HomeAway’s gain. Pat Becker Jr., who manages $2.4 billion as a principal at Becker Capital Management, told The San Francisco Chronicle: “They’ve done well because of the limited float. There is just not supply to go around, and you see some enormous moves in stock prices.”
The closing price on the first day of the IPO values HomeAway at $3.2 billion, which is 19 times last year’s revenue. That can be compared to travel booking website Priceline.com, who has a market value of $25 billion, which is 8.1 times 2010 revenue.
As this blog post is being written the price of HomeAway’s shares is $37.69, which is a little less than what it climbed to on the initial day of the IPO, but it is still a lot higher than the original price.
Have you, or are you planning on investing in HomeAway? Our suggestion is that you buy a few shares and by doing so become an owner of the company, which will provide you with information and you can speak at stock holder meetings. Also, so far, it looks like buying shares in HomeAway could be a good investment.