LNKD IPO opens huge at $83 • Hacker News Board

Re: LNKD IPO opens huge at $83

#101

Post by jeffreymcmanus » Thu, May 19, 2011, 5:10 PM UTC

UncleOxidant wrote: post #89

portman wrote: post #21

Earlier quoted context omitted.

>>*"they just raised $660 million dollars out of the gate in this IPO" No, that's not how it works. LinkedIn priced their IPO at $45/share, meaning they raised $352.8 million. The share price right now has no impact on how much money they raised.

They left a lot of money on the table.

Not necessarily, since the $45 price was at the top of the range and the issue had already been repriced. We won't know whether the $45 price was optimal or not for a while -- it may seem expensive in 90 days when the price settles down.

Re: LNKD IPO opens huge at $83

#102

Post by radicaldreamer » Thu, May 19, 2011, 5:17 PM UTC

smokeyj wrote: post #63

bemmu wrote: post #14

Earlier quoted context omitted.

Latest NPR Planet Money podcast episode was about bubbles, they interviewed a university professor that was running experiments on his students. They had a fake stock market with only one stock on it that would have a random dividend of either $0 or $2, so $1 on average. Students were given money to invest in the stock market. Running this experiment apparently over multiple courses, even in this small market there w…

People don't treat monopoly money like real money. Stunning. Next the professor should see how risk adverse these students are with their own tuition dollars. Suddenly these kids aren't the big rollers they were with imaginary risk. Quit looking at numbers, follow the risk. Numbers are relative to risk. Consider the influence of monetary policy on risk. Does a cheaper dollar make a frugal investor? Hardly.

I don't think people treat money they see on a screen or on a receipt like cash either. There's a mental disconnect.

Re: LNKD IPO opens huge at $83

#103

Post by e13 » Thu, May 19, 2011, 5:21 PM UTC

linkedin reminds me of Classmates.com

Re: LNKD IPO opens huge at $83

#104

Post by dj_axl » Thu, May 19, 2011, 5:33 PM UTC

brosephius wrote: post #51

dman wrote: post #15

Earlier quoted context omitted.

Might be a nice time to short, that is if there is someone willing to be on the other side of that trade.

and assuming you can find shares to short, and are willing to pay the borrow cost.

During the first 30 days after an IPO, the underwriters are not allowed to lend shares for short sale. Additionally, number of shares are limited. The entire float is not available on the first day of trading. So today, it is probably impossible to short. 30 days from now, it should be available to short.

http://cash.investopedia.com/ask/answers/05/062905.asp

Re: LNKD IPO opens huge at $83

#105

Post by johnrob » Thu, May 19, 2011, 5:38 PM UTC

run4yourlives wrote: post #96

This is nothing more than a legalized pyramid scheme. The valuation of LinkedIn has nothing whatsoever to do with the business, its performance, future potential or current assets. It has everything to do with demand for its stock being high. At some point, the fad will die and a whole host of small time investors will lose their shirts (or houses, life savings, retirement funds, what have you). Like all pyramids, if…

If you're looking for a scandal, how about the apparent gross underpricing of the stock by linkedin's investment bank? Isn't the reason companies hire these "experts" is that they have a good idea what price people will pay for your stock? Missing by over 50% is pretty bad.

EDIT: On the flip side, you can't blame the banks if the institutional investors are simply overpaying.

Re: LNKD IPO opens huge at $83

#106

Post by MartinCron » Thu, May 19, 2011, 5:45 PM UTC

yoseph wrote: post #3

Round again we go... It's so disappointing to watch... But it's not a bubble if we're able to tell it's a bubble, right?

The way I see it is: if you have to ask if you're in a speculative bubble, odds are you're in a speculative bubble.

Re: LNKD IPO opens huge at $83

#107

Post by [deleted] » Thu, May 19, 2011, 5:49 PM UTC

rbranson wrote: post #93

portman wrote: post #21

Earlier quoted context omitted.

>>*"they just raised $660 million dollars out of the gate in this IPO" No, that's not how it works. LinkedIn priced their IPO at $45/share, meaning they raised $352.8 million. The share price right now has no impact on how much money they raised.

... and remember guys, the stock price is just what the public is willing to pay for it, and is not directly bound by any fundamentals. It's not LinkedIn's fault that their stock is overvalued.

[deleted]

Re: LNKD IPO opens huge at $83

#108

Post by [deleted] » Thu, May 19, 2011, 5:53 PM UTC

sabat wrote: post #87

portman wrote: post #21

Earlier quoted context omitted.

>>*"they just raised $660 million dollars out of the gate in this IPO" No, that's not how it works. LinkedIn priced their IPO at $45/share, meaning they raised $352.8 million. The share price right now has no impact on how much money they raised.

Good point, although the original point still stands: $352.8 million on last year's $15 million. Of course, stock price is a prediction of the future, not necessarily a comment on the past.

[deleted]

Re: LNKD IPO opens huge at $83

#109

Post by brown9-2 » Thu, May 19, 2011, 5:54 PM UTC

jeffreymcmanus wrote: post #101

UncleOxidant wrote: post #89

Earlier quoted context omitted.

They left a lot of money on the table.

Not necessarily, since the $45 price was at the top of the range and the issue had already been repriced. We won't know whether the $45 price was optimal or not for a while -- it may seem expensive in 90 days when the price settles down.

But if the public is buying the stock at the $80 range minutes after it opens, isn't that enough to say that the initial offer was lower than what it could be? I don't think you need to know what price the stock is trading at three months from now in order to judge the initial sale value.

Re: LNKD IPO opens huge at $83

#110

Post by jeffreymcmanus » Thu, May 19, 2011, 5:56 PM UTC

johnrob wrote: post #105

run4yourlives wrote: post #96

This is nothing more than a legalized pyramid scheme. The valuation of LinkedIn has nothing whatsoever to do with the business, its performance, future potential or current assets. It has everything to do with demand for its stock being high. At some point, the fad will die and a whole host of small time investors will lose their shirts (or houses, life savings, retirement funds, what have you). Like all pyramids, if…

If you're looking for a scandal, how about the apparent gross underpricing of the stock by linkedin's investment bank? Isn't the reason companies hire these "experts" is that they have a good idea what price people will pay for your stock? Missing by over 50% is pretty bad. EDIT: On the flip side, you can't blame the banks if the institutional investors are simply overpaying.

Every IPO underwriter has to make an educated guess as to the opening price of the stock. Again, the "apparent gross underpricing" won't really be apparent for months, and it certainly wasn't apparent at the time the IPO was priced, since we can assume that their underwriter does not possess True Financial Clairvoyance(tm).