Zoopla wants to be the next billion pound tech company

IPO WATCH: Property website Zoopla reckons it can get 200p-250p when it floats in a couple of weeks' time. That could make it worth more than £1bn.

by Emma Haslett
Last Updated: 25 Nov 2014

There MT was, thinking appetites for crazy tech flotations had dwindled. It was wrong: property website Zoopla reckons that when it IPOs in a couple of weeks’ time, it can persuade investors to shell out 200p-250p for its shares, which puts its valuation at between £833m-£1.04bn. That’s quite a lot of money...

Admittedly, it hasn’t gone completely berserk: arch-nemesis Rightmove currently trades at about 30 times its earnings – if Zoopla did the same, its valuation would be closer to £1.1bn.

But it’s still ambitious for a tech stock, considering the less-than-successful tech IPOs (Just Eat, AO World, King) that have taken place over the past few months. Although Zoopla is in a slightly different position in that it’s one of two major players in a fast-growing market: average monthly visits hit 41 million in the eight months to the end of May, it said today. And more than half of overall traffic came from mobile devices – which suggests it’s capturing sought-after mobile traffic well.

To keep estate agents (more on whom in a second) sweet, the company says it will offer them shares at a 20% discount to the offer price. It’s set aside 20 million - £50m worth if it gets that top-end price – for that purpose. Considering the company’s recent performance, we’d imagine agents will snap them up.

What could possibly go wrong? Well, a couple of things, actually. Firstly, estate agents aren’t particularly pleased with its current pricing strategy: they complain fees are complex (charges increase if you want your listings to be higher for mobile viewers, for instance) and that it’s hard to move to lower-priced packages.

Secondly, MT isn’t the only one to have called the top of the housing market. Earlier this week, Nationwide published figures showing month-on-month growth in house prices dropped to 0.7% in May from 1.2% in April. Since the share prices of anything to do with the property industry – estate agents, builders, housebuilders, property websites – are so dependent on house prices, that could mean Zoopla’s £1bn dream is over before it’s even begun.  

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