One of the top IPOs of the past year is Zillow (NASDAQ:Z) — an operator of a real estate search engine that has seen its shares gain nearly 75% this year.
However, on Tuesday, Zillow’s investors got some distressing news — he Securities and Exchange Commission requested information about its 2012 10-K report. On the news, the company’s stock price initially plunged 10%, yet by the end of trading day, the loss narrowed to 4.2%.
The SEC wanted to know about various revenue items, such as the price of the subscription service for real estate agents, the money generated from the mortgage segment and the growth rates in the advertising business. In fact, the agency made the same inquiries to Zillow rival, Trulia (NYSE:TRLA). The company recently came public and has clocked a return of 25%.
It’s actually common for newer tech companies to get inquiries from the SEC. After all, they are trailblazing new business models and often experience major shifts in revenue streams. Such things have been the case for Zillow.
In light of this, the inquiry is probably harmless, but definitely worth monitoring.
Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.