Fairfax shares were trading at $1.06 earlier this week before adjusting for the Domain separation, which saw them fall around 30 per cent on Thursday.

However, each Fairfax shareholder now has one Domain share for every 10 shares in Fairfax.

That combined holding was worth $1.13 on Thursday morning, thanks to a strong debut for Domain, which was trading around $3.90 a share, giving it a market capitalisation of more than $2.2 billion. It drifted slightly lower to finish the day at $3.69 while Fairfax finished at 73 cents giving a combined value of $1.10.

Analysts had predicted Domain would begin the day at $3.50.

"I think the share price is recognition of the work done on the business and the work done by Fairfax," Domain's chief executive Antony Catalano said.

Fairfax Media chief executive Greg Hywood said he was "thrilled" with Domain's debut.

History shows Domain's initial trading pattern is typical of spin-offs and demergers, with the separated sum of the parts getting valued more than the previous whole.

It is expected that both Fairfax and Domain share prices will be relatively volatile in the near future as shareholders who previously held stock in Fairfax as a means to get exposure to Domain are now able to just hold Domain.

Fairfax, however, has retained a 60 per cent stake in Domain, so the gains in Domain's share price should still be reflected in the parent company's share price.

Domain has long been regarded as the jewel in the Fairfax crown given its strong growth profile.

Yet while Domain will trade at a much higher price-earnings-multiple than Fairfax, there has been an expectation that it will trade on a lower multiple than its major competitor - the market leader - REA.

However, some analysts take the view that as the number two player in the real estate market, Domain has the opportunity to grow faster than REA, having already picked up market share over the past few years.

A bullish investor note from Morgan Stanley said this week that while REA may be bigger, more profitable and therefore worth more, consensus estimates were missing the fact that Domain could post bigger earnings and sales growth as it was coming off a lower base, and as a result its shares could "initially trade at parity or even at a premium multiple to REA".

Citi echoed this sentiment to some extent, saying that "Domain Digital is growing revenue faster than REA Australia - while growth trends in Sydney and Melbourne are close to REA, Domain is also growing in other states (notably Queensland) off a very low base.'