Hype It Up
With LinkedIn's shares hovering around US$ 102 in Friday's early trading (up 8%), much ink is being spilt on whether the company is being overpriced (which it clearly is, in these exuberant early days). But in the longer term, when the company has had the chance to put out a few quarters' figures, investors might look back and think their investment a sound one.
People who won't be complaining are the new millionaires behind the venture, including founder and CEO Reid Hoffman who gets around $2 billion for his efforts, plus the investors and bankers (there's a list on Business Insider). The stock has more than doubled its US$ 45 starting price and values the company at just shy of US$ 10 billion.
Calm Down, Calm Down
Once the immediate interest is over, and the smart money (if you want to call it that) has moved on to the next company, LinkedIn will need to prove that it can generate the revenue and profit to justify its share price.
That means, building on the over US$ 250 million revenue it currently generates, by finding new ways to use its enterprise focus/ job hunting capabilities and other USPs to good effect. Of course, that next company IPOing is likely to be Facebook, which will dwarf this offering by up to a factor of 10.
Reading around the press, many pundits are condemning the bankers for manipulating these IPOs to generate quick and easy cash for themselves, while others point out that the poor jobs outlook could hamper LinkedIn's growth opportunity.
Pennies from Heaven
For smaller investors, the trick here seems to have been to get into the private share exchanges before the IPO, when you could buy stock at US$ 25 to $30. Anyone who got in there will be enjoying a well-earned break today.
So, look for the next IPOs down the line and make sure you get in early on the likes of Groupon, or social games and app developers, and stay well clear of market-manipulated show pieces like yesterday's events.