LinkedIn IPO: Not a 'Netscape Moment'

[scandal 951]

Let's see if I've done this math right ....

LNKD is expected to open at $42-45 per share, with a valuation of $4 billion, and with trailing earnings of $15.4million.

That means a float of 89million shares ($4bil/$45), and it means earnings per share of $0.17 ($15.4mil / 89mil shares) ...

that comes to a TRAILING P/E of 260.

Can anyone else say "overpriced piece of garbage stock"?

LinkedIn IPO: Not a 'Netscape Moment'

By Olivia Oran 05/18/11 - 12:11 PM EDT

NEW YORK (TheStreet) -- While stock market reception for LinkedIn will be an important barometer for gauging investor appetite on social networking firms, the highly-anticipated IPO Thursday will likely be far from the "Netscape moment" that tech watchers are hoping for: a watershed IPO that triggers a glut of other splashy tech offerings.

"Companies like Facebook and Zynga will be cheering for a successful LinkedIn offering, but the IPO will only have implications for companies that look a lot like LinkedIn," said Lise Buyer, founding principal of Class V Group, which advises companies who are considering going public.

Buyer noted that LinkedIn's public debut will instead be used to determine whether sky-high valuations for Facebook and other private tech firms, which have traded actively on secondary markets, can hold up in the public arena.

"If LinkedIn does well in the public markets, then other tech companies will compare themselves against it and say 'ours should be even higher,'" said Caine Moss, a partner at Silicon Valley law firm Goodwin Proctor.

While LinkedIn is often grouped with Facebook because both companies focus on the social networking space, they operate at vastly different scales. LinkedIn has more than 100 million users, posting $243 million in sales last year and earnings of $15.4 million.

Facebook, in comparison, has more than 600 million users and reportedly earned $1.2 billion in revenue and $355 million in net income for the first nine months of 2010. It was valued at $50 billion after a funding round in January from Goldman Sachs(GS_).

LinkedIn, which will debut on the NYSE Thursday under the symbol "LNKD," said Tuesday it had upped the expected price range of its offering by 30%, increasing its valuation to more than $4 billion to feed a surge in investor demand. The company is expected to open at a price range of $42 to $45.

Shares of LinkedIn were trading at $12 as of July 2009 on secondary market SharesPost, but had crept up to $31 as of March.

But while LinkedIn may lack the caché of more familiar consumer facing companies like Facebook and Groupon, tech watchers still expect the company to benefit from a first mover's advantage.

"There's a bit of scarcity that goes into this offering because there hasn't been a sexy consumer Internet company of this size and maturity for a while -- investors want a piece of it," said Moss.

Some see LinkedIn's IPO as evidence of a new tech bubble, where early-stage investors have pinned massive valuations to buzzy, but not always profitable, private companies.

"If these guys go public with a $3 billion to $4 billion valuation, others will follow -- at some point we're going to run out of quality companies to buy," said Steve Blank, who teaches entrepreneurship at the University of California, Berkeley and Stanford University. "It's all about finding the quality companies and making sure you're not buying the last one out, because then you'll get screwed."

[one...two...tree 2,762]

I don't understand why LinkedIn needs to go public.

[Dan J 277]

I don't understand why LinkedIn needs to go public.

So the owners can get their big payday.

[one...two...tree 2,762]

So the owners can get their big payday.

Hey Dan, I'm sending you a PM.

[scandal 951]

I don't understand why LinkedIn needs to go public.

because all the cool kids are doing it.

[scandal 951]

LNKD currently trading at $104 (1:43 ET, a bit over 2 hours to the close).

Priced to perfection? This POS is priced to absurdity and beyond.

Do people never, ever, EVER learn???

As LinkedIn IPO soars, so do questions about pricing

May 19, 2011 | 9:53 am

Pop. That's the sound of LinkedIn's shares exploding on the New York Stock Exchange in their first morning of trading.

The scorching hot stock is now up more than 140% to $109 but has soared as high as $122.70, delivering the kind of first-day rush that dot-coms made infamous during the first Internet boom. And LinkedIn's underwriters, Morgan Stanley and Bank of America, are, well, laughing all the way to the bank.

As Business Insider's Henry Blodget, a major player as a stock analyst in the 1990s stock bubble, rather bluntly pointed out: LinkedIn executives should be questioning if the bankers "wildly" underpriced the deal and sold LinkedIn's stock to institutional clients "way too cheaply."

In other words, because the bankers had priced the stock at $45 instead of $60 a share, LinkedIn may have left about $130 million on the table, and its shareholders who are also selling left about $50 million.

The logic goes: Everyone knew the shares would take off after the opening bell. But a 130% rise, Blodget said, would suggest that either the bankers were clueless about how much investors were willing to pay to get a piece of LinkedIn, or they just gave their institutional investors an early Christmas present wrapped in a greenbacks bow.

Did LinkedIn get swindled? LinkedIn CEO Jeff Weiner isn't buying it. He told Bloomberg TV this morning that he was "very comfortable" with the IPO price.

Now it's up to LinkedIn to live up to its stock price.

"To justify the current price, LinkedIn will need to execute flawlessly," said Michael Yoshikami, chief investment strategist at YCMNet Advisors in Walnut Creek, Calif.