LinkedIn IPO brings in US$352.8M
Business networking site, LinkedIn, wrapped up its initial public offering (IPO) on Wednesday and raked in US$352.8 million, after pricing its shares at US$45 each and selling 7.8 million of these to investors.
According to a report Thursday by news agency Reuters, the IPO marked the first time a U.S. social media company sold shares to the public, ahead of notable contemporaries such as Facebook and Google.
By revising its price share from between US$32 and US$35 each, to US$42 and US$45, LinkedIn now has a market value of over US$4.2 billion, or 11.3 times its projected annual sales, the report stated. By comparison, Facebook's current valuation is 13.8 times its projected annual sales while Salesforce.com's stands at 8.3 times.
"The valuation for LinkedIn is rich," Michael Moe, chief investment officer of GSV Capital Management, said in the Reuters article. "To earn the valuation, it has to continue to grow very, very fast."
Targeted at the enterprise space, LinkedIn markets itself as a site for members to search for jobs, recruit employees and share information and opportunities with people in their networks. While users can create personal profiles for free, paid subscriptions were introduced in 2005 to provide recruiters more access to candidates and professional ways to communicate, Reuters noted.
The company also gets 70 percent of its revenue from business subscriptions. Additionally, its business hiring tools--which target recruiters--accounted for about half of LinkedIn's US$93.9 million in its first-quarter revenue, 30 percent of which came from ads. The company's net income rose 14 percent to almost US$2.1 million in the first quarter as sales more than doubled, the report revealed.
The company earlier stated during its filing with the U.S. Securities and Exchange Commission in January that proceeds from the offering will be used to fund existing operations and expand its business, including possibly buying other companies or technologies.
Earlier, venture capitalists ZDNet Asia spoke to were mixed in their views on whether technology-based IPOs will make a comeback this year. They did, however, note that companies and investors were savvier in dealing with the hype and pressures of going public.