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LinkedIn shares double on debut | LinkedIn shares double on debut |
(40 minutes later) | |
Shares in business networking website LinkedIn have more than doubled on their trading debut in New York, having been priced at $45 each. | Shares in business networking website LinkedIn have more than doubled on their trading debut in New York, having been priced at $45 each. |
Its share price hit $108 at one point in the sort of debut rally not seen since the dotcom bubble of the late 1990s. | |
The initial sale price was already at the top of an increased range. | The initial sale price was already at the top of an increased range. |
LinkedIn sold 7.84 million shares at $45 each. At $100 a share the company is worth about $10bn. | |
LinkedIn is the first US social network site to get a share listing. | |
Some analysts believe its strong debut is down to investors' over-enthusiasm for social media stocks. | |
"The price we're seeing for LinkedIn shares has nothing to do with the value of the company," says Paul Kedrosky, angel investor and senior fellow at the Kaufman Foundation. | "The price we're seeing for LinkedIn shares has nothing to do with the value of the company," says Paul Kedrosky, angel investor and senior fellow at the Kaufman Foundation. |
"It's just an indication of how much appetite and interest there is for social media stocks." | "It's just an indication of how much appetite and interest there is for social media stocks." |
"LinkedIn is the only trading vehicle for this type of stock. It's the equivalent of trying to funnel thousands of people through a single door". | "LinkedIn is the only trading vehicle for this type of stock. It's the equivalent of trying to funnel thousands of people through a single door". |
"Every investor I know is currently scouring around for a social media company to take public. They think it's worth selling at this stage, but not necessarily buying the stocks," he added. | "Every investor I know is currently scouring around for a social media company to take public. They think it's worth selling at this stage, but not necessarily buying the stocks," he added. |
$4bn looks a very fancy price for a company with revenues last year of $243m and profits of $15.4m. | $4bn looks a very fancy price for a company with revenues last year of $243m and profits of $15.4m. |
That looks modest compared with the figures of $50bn and more being bandied around for Facebook's valuation. | That looks modest compared with the figures of $50bn and more being bandied around for Facebook's valuation. |
Both price tags will look dumb to those sceptics who see Facebook as an ephemeral craze for people with poor social skills and LinkedIn as little more than a glorified Rolodex | Both price tags will look dumb to those sceptics who see Facebook as an ephemeral craze for people with poor social skills and LinkedIn as little more than a glorified Rolodex |
There have been concerns that social networking sites are creating a new stock market bubble. | There have been concerns that social networking sites are creating a new stock market bubble. |
Shares in one of China's biggest social networking sites Renren rose sharply on their debut in New York earlier this month. | Shares in one of China's biggest social networking sites Renren rose sharply on their debut in New York earlier this month. |
Renren's shares were priced at $14, and in their first day of trading peaked at $21.93 before closing at $18.01. | Renren's shares were priced at $14, and in their first day of trading peaked at $21.93 before closing at $18.01. |
Facebook and Twitter are both expected to seek stock market listings in the next few years. | Facebook and Twitter are both expected to seek stock market listings in the next few years. |
On Wednesday, the price range for LinkedIn's initial public offering was lifted from $32 to $35 a share to a range of $42 to $45. | On Wednesday, the price range for LinkedIn's initial public offering was lifted from $32 to $35 a share to a range of $42 to $45. |
Before shares in LinkedIn started trading, this new price range had valued it at about 17 times its earnings from 2010. | Before shares in LinkedIn started trading, this new price range had valued it at about 17 times its earnings from 2010. |
But at $100 a share the company is worth 25 times its 2011 revenue, assuming first-quarter sales are matched over the next three quarters. | |
Google, which went public in 2004, has a market value of about six times its annual revenues. | Google, which went public in 2004, has a market value of about six times its annual revenues. |