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In the first of what could be numerous social networking IPO's, LinkedIn's shares skyrocketed on the first day of trading today (May 19, 2011) under the ticker LKND. Could this IPO usher in a new wave of old dot.com like exuberance?
According to the LA Times:
LinkedIn shares skyrocketed more than 80% to trade at about $86 a share, and at a high of $92.99 a share, on Thursday as the social networking site launched its initial public offering.
For a company that does not expect to turn a profit this year, the 8-year-old company has had a very successful first day on the street.
Forbes: LinkedIn’s 1999-Style IPO Rekindles Questions About Leaving Money On The Table writes:
Some of the key questions are: if financial markets are valuing the stock at $106, why was its price set at $45? And who ends up with the short end of the stick? The simple answer is that the issuing firm (LinkedIn) is the loser.
Instead of raising money based on a valuation of over $100, it has raised funds based on the much lower $45 valuation. Based on the current stock price, the firm has therefore raised less than 50% of the capital it could have received had the stock been priced more correctly by its investment bankers.
Huffington Post asks
LinkedIn IPO Is Biggest Since Google's--But Is It Too Big? .
Previously derided as a "Facebook for losers," LinkedIn's sky-high valuation suggests founder Reid Hoffman--now reportedly worth over $800 million--may be having the last laugh. At the same time however, it raises questions about the sustainability of these web businesses, and whether the bubble could burst.
So are investors paying far too much for LinkedIn--essentially a modern Rolodex--and will the company come to look less like Google, which continues to rake in cash, and more like the failed web firms of the 1990s?
So, what is LinkedIn going to do with all this money and does it mean we're seeing the start of a new bubble?
Social Media Today writes in Blowing Bubbles? What the LinkedIn IPO Means for You
LinkedIn's IPO went ahead because it is one social media player whose revenue model is not based solely on advertising or premium subscriptions, otherwise known as the freemium model.
Because the company collects money from both individuals and businesses, this diversity in revenue and services makes LinkedIn unique.
It also appears that LinkedIn will look to expand its reach by gobbling up smaller sites. In the same Social Media Today article the author shares:
LinkedIn will eventually use the stock as a currency to go on an acquisition binge. It is expected to chase smaller B2B social media applications which have struggled to build revenue – such as Hashable, Quora, SlideShare, or Yammer.
So while today was a fly-high day for LinkedIn and tech investors, it isn't likely to become the norm anytime soon. That said, LinkedIn did make history today and finished its IPO with a big exclamation point.
Credit Image: mariosundarvia Flickr
Paula Gregorowicz, The Intuitive Intelligence™ Coach
Download the Free Report: Your Own Uniqueness: The Path to Purpose, Prosperity, and Playfulness at http://www.intuitiveintelligencecoaching.
