LinkedIn's IPO: A proxy for an eventual Facebook IPO

LinkedIn's IPO: A proxy for an eventual Facebook IPO

Summary: LinkedIn priced its initial public offering at $45 a share, giving the company a valuation of roughly $4 billion. The IPO price, which was raised, indicates a voracious investor appetite for social networking plays.

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LinkedIn priced its initial public offering at $45 a share, giving the company a valuation of roughly $4.5 billion. The IPO price, which was raised, indicates a voracious investor appetite for social networking plays.

The big question is what happens once a few more social networking companies go public. Is LinkedIn just a warm up for Facebook? Or Zynga? Or Groupon?

LinkedIn will trade under the ticker LNKD on Thursday, according to a statement. On Tuesday, the company raised its price range to $42 to $45 a share, up $10 from the previous range.

So what do you get for your money?

  • 100 million members in more than 200 countries and territories.
  • 2010 revenue of $243.1 million.
  • 2010 net income of $15.38 million.
  • First quarter revenue of $93.9 million and net income of $2.07 million.
  • Targeted advertising to a B2B audience.
  • A play on HR since LinkedIn has hiring services and subscriptions used by 4,800 companies.

The company in SEC filings has warned that it expects revenue growth to slow going forward and that it won't be profitable in 2011. Then again, LinkedIn is investing for future growth. Toss in the fact that many LinkedIn users aren't regular users and you have all you need for quite a debate.

Related:

Topics: Legal, Banking, Social Enterprise

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  • RE: LinkedIn's IPO: A proxy for an eventual Facebook IPO

    I've been using LinkedIn for over six years, more for keeping in touch or for getting back in touch with people I know. Not much else. Not a bad website, but I pay nothing, because the services offered are not worth much either. Yes, recruiting agencies are the most likely users that pay a certain amount for the services, but the reverse network externality effect (a fast growing number of headhunting / employment agencies will pay for a slow growing or stagnating amount of potential candidates, which, most likely, will hit the critical mass after which the paying customers will pull out due to inefficiency perception- the searches will show the same candidates to competing head hunters) will, eventually, slow the (expected fast) growth of this business. Plus, the ?IPO winner?s curse? is at work too: if the IPO successful (which... is highly unlikely), the ?me too? companies/capital will jump in, as there is (almost) no sizable barrier to entry into this business, as there are also almost no costs to exiting this business either. Do I ?..smell another DOT COM (E)-DOT GONE ?in action?

    $3.4 MM net after $243 MM in revenue? Losses are projected for the coming year/years? Resulting in ?.$4 BILLION in (projected) market value?

    With this set of financial data, I you were to attend a business school (any of them, even the lowest ranking one), most likely, you would flunk the Finance and / or Securities class, magna cum laudae ;-{ ))))))))))

    $43/ share for LinkedIn?s IPO is the best joke I heard since the real estate ?pundits? were touting that the housing market is strong, just a couple of weeks before the housing bubble burst.

    I know that everybody?s waiting for the next Microsoft or Intel to come (?the Second Coming?!?!?!?!!, Just kiddin?!!!?). But do not hold your breath: LinkedIn is NOT the Chosen One.

    Jcocares@yahoo.com


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    jcocares@...
  • RE: LinkedIn's IPO: A proxy for an eventual Facebook IPO

    Ted Nellon said it best:

    Smart investors know LinkedIn is a piece of sh*t stock at these valuations.
    Based on the current business model, it'd be very hard for them triple revenue by 2013. So what is happening?

    1) VCs need to exit; offload to dumb money
    2) set valuations very high, so the stock has more room to fall
    3) have a small group investors control the majority of the stock
    4) cross trade (groups of investors colluding to share stocks to one another) the f*ck out of it to pump up the stock
    5) while the stock is being pumped, have the PR apparatus create a narrative on why the stock is still undervalued at these lofty prices
    6) have mainstream bloggers perpetuate the narrative
    7) ma & pa read the 'reporting', believe the narrative, invest 401 in stock
    8) VCs and financiers exit
    9) ma & pa hold the bag
    10) analysts revised forecast, reversion to the mean, narrative is discovered to be illusory

    Most Web 2.0 stock will follow this lifecycle. Look at Demand Media & Open Table's graph.
    Bah. Don't be dumb money. The market is going to plunge at the end of June, once QE2 ends.
    Bill Gross is even holding US Treasuries; only cash & gold.

    Now is not a good time to invest. sell. sell. sell. Buy better stock on the next HUGE correction.

    jcocares@yahoo.com

    Read more: http://www.businessinsider.com/linkedin-estimates-2011-5#ixzz1Mo9a5dRw
    jcocares@...