LinkedIn Corp’s NYSE:LNKD shares more than doubled in their public trading debut
on Thursday, evoking memories of the investor love affair with Internet
stocks during the dot-com boom of the late 1990s.
The professional social
networking company, which began in one man’s living room less than a
decade ago, is now worth more than motorcycle maker Harley Davidson Inc
and ratings company Moodys Corp.
got here at 6 a.m. We’ve been celebrating since then," one LinkedIn
employee said in the parking lot of the company’s Mountain View,
"We recognize that there’s potentially a bubble right now," said the employee, who spoke on condition of anonymity.
of LinkedIn, which rose as much as 171 percent in their first day of
trade on the New York Stock Exchange, closed at $94.25, more than 109
percent above the $45 IPO price.
typically try to price an IPO so that the stock rises about 15 percent
on the first day of trading: enough to reward investors who made a bet,
but not so much that the company and original shareholders feel they
Only days ago,
LinkedIn proposed a price range for the IPO that valued it at just over
$3 billion. Now, after its first day of trade, it is worth nearly $9
billion, adding to concerns that social networking company valuations
are out of whack with their earnings potential.
seems to bring back memories of the tech bubble," said Jack Ablin,
chief investment officer at Harris Private Bank in Chicago. "Based on
what I know it seems like investors are a little overly enthusiastic."
hedge fund manager who flipped his holdings in the low-80’s described
how difficult it was to get shares. "I got 500 shares and was told to
consider myself lucky," he said.
are billion-dollar institutions that are not getting any stock," he
said, recounting something he learned from salesperson at one of the
Underwriters for the IPO were led by Morgan Stanley, Bank of America Merrill Lynch and JPMorgan.
is the first prominent U.S. social networking company to publicly test
just how hungry investors are for social media companies such as
Facebook, Groupon and Twitter, which are widely expected to go public in
inevitable process for us, the next thing that happens," Facebook Chief
Operating Officer Sheryl Sandberg told the Reuters Global Technology Summit on Thursday.
In recent years, only Chinese Internet stocks have seen such exuberant first-day trading on U.S. exchanges.
rise was the biggest for a newly public Web stock since shares of Qihoo
360 Technology Co, China’s third most-popular Internet company, rose
134 percent in their NYSE debut in March.
LinkedIn is one of few foreign social networking companies that can operate in China,
where it has about a million users. Many other sites including Twitter,
Facebook and Google don’t have a presence in the world’s biggest
Facebook, LinkedIn allows users to create profile pages with a photo and
details about themselves. But it is largely used for professional
rather than social personas, and is basically an online database of
2010 net income attributable to common stockholders was $3.4 million on
net revenue of $243.1 million. LinkedIn has said it does not expect to
be profitable in 2011.
As of March
31, LinkedIn had 1,288 employees and 102 million registered members. As
of Thursday, its market value per employee was almost $7 million and
about $87 per user.
Chief Executive Jeff Weine shrugged off the trading craze or even
worries that the pricing underestimated the appetite for the stock.
for myself, personally I’m not even thinking twice about where the
price is today and leaving money on the table or even anything remotely
along those lines," he told Reuters, adding that the stock "will take
care of itself."
He also cautioned
against viewing LinkedIn as a proxy for other potential big-name IPOs,
saying those stocks would be driven by their own business prospects.
who sold about 5 percent of his holdings in the offering, made $5.2
million on the IPO. His remaining stake in LinkedIn is worth just above
co-founder, ex-PayPal executive Reid Hoffman, made $5.2 million by
selling less than 1 percent of his shares. His remaining stake in the
company — almost 22 percent of the voting power — is now worth about
The company raised
$352.8 million on Wednesday by selling only an 8 percent stake, or 7.84
million shares, for $45 apiece. Because of strong demand, it increased
its anticipated price range by $10 a day before the IPO to $42 to $45
LinkedIn’s shares were
sold at about 17.5 times its 2010 sales. They are now worth 37 times
2010 sales. Google Inc’s shares are valued at just under six times 2010
"There’s a lot of
enthusiasm and maybe there’s excess demand because there is just not a
whole lot of supply of these types of companies in the market," said
Scott Cutler, co-head of U.S. listings at NYSE. "That can drive a richer
valuation but it’s not a bubble."
Outside LinkedIn headquarters, three men approached by a reporter said they worked for a company next door.
"We don’t work for LinkedIn. They are the ones driving the Lamborghinis," one joked.
There were as yet no Lamborghinis in sight.
reporting by Gabrielle Saveri in Mountain View; Edward Krudy, Rodrigo
Campos, Angela Moon, Dan Wilchins, Chris Sanders, Caroline Valetkevitch,
Bill Rigby and Jennifer Saba and IFR’s Stephen Lacey in New York;
Editing by Lisa Von Ahn, Maureen Bavdek, Robert MacMillan and Steve Orlofsky)