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LNKD IPO opens huge at $83

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Re: LNKD IPO opens huge at $83

#121

Post by nikcub »

nodata wrote: post #19
suking wrote: post #2

Almost $100/user, not even including active users... that is insanity.

If* LinkedIn becomes a key part of most companies' recruiting process, then it's undervalued. (* Yeah yeah, right now it's not)

4500 corporate customers, including 75% of the Fortune 100, are currently paying LinkedIn an average of $24k for recruitment services (ie. access to profiles for headhunting)

That is one of three revenue streams. All three have been growing 100% YoY, and ~60% of it is USA (ie. they haven't grown out internationally yet)

Re: LNKD IPO opens huge at $83

#122

Post by chollida1 »

EwanToo wrote: post #46
blantonl wrote: post #5

LinkedIn made $15 million dollars last year, and they just raised $660 million dollars out of the gate in this IPO. And, this IPO values LinkedIn at somewhere close to 6.5 billion dollars. A valuation of 6.5 billion dollars on $15 million net income. Let that sink in.

For comparison, in 1999 Webvan IPO'd at $8 billion, with revenue (not profit!) of $395,000 :) http://cnet.co/kIKoMh

The actual URL the above shortener points to:

http://news.cnet.com/2100-1040-232534.html

Re: LNKD IPO opens huge at $83

#123

Post by brown9-2 »

jeffreymcmanus wrote: post #119
brown9-2 wrote: post #109

Earlier quoted context omitted.

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.

That really doesn't make any sense. As anyone who knows the stock market will tell you, if you can guess the price of a stock before the market opens, you'd be a wealthy man. But underwriters are conservative with initial IPO pricings because 1) they have no real idea where a stock will go once it's public and 2) they want the stock to go up after it opens (IPOs that don't do this are said to be "broken" and sometime…

Those are good points, and I'm not arguing that they left a lot of money on the table or didn't, but what I am disputing is where you said "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."

Why does the price 90 days from now matter to the judgement of whether or not the initial sale - today's sale only - was a success? If the price drops below the initial sale value, then $45 today will definitely seem expensive to people buying it 90 days from now. But I don't see where it would mean that the company made a mistake in the initial offer of $45/share - in fact, wouldn't it look like the company got a good deal, in selling the initial shares at above-market-values (in 90 days from now)?

Re: LNKD IPO opens huge at $83

#124

Post by digikata »

lefstathiou wrote: post #90
joezydeco wrote: post #55

Earlier quoted context omitted.

How much of that goes to crystal trophies and high-fiving brokers that made the deal happen?

7% of the total IPO issuance goes to the bankers. This number is consistent across the street. Once upon a time, anti-collusion investigations were threatened because there was no explanation for why every major bank charges exactly 7%

I've often thought that there is no need for collusion if you can exchange minimal information over public, legal channels and know how to work a strategy that assumes a modified prisoners dilemma. You can often see oil prices or airline tickets operating that way. E.g when one airline raises prices, then sees that no-one is following the rise, after which the price comes back down. Or everyone else is ready to raise prices and ticket prices go up.

Re: LNKD IPO opens huge at $83

#125

Post by nikcub »

blantonl wrote: post #5

LinkedIn made $15 million dollars last year, and they just raised $660 million dollars out of the gate in this IPO. And, this IPO values LinkedIn at somewhere close to 6.5 billion dollars. A valuation of 6.5 billion dollars on $15 million net income. Let that sink in.

PE ratios are for yield businesses that have been around for decades and with nowhere much to go

With LNKD you should be looking at revenue, competition and market penetration (rev is doubling yoy, three sources, 4500 business customers paying avg. $23k a year, 75% of fortune 100, 60% USA - which means they have a lot of growing to do). they are spending everything that comes in on product development, sales and marketing and R&D - it is all growth phase. $400M revenue this year.

To add - LinkedIn isn't really a 'social' company either since its revenue is not based on ads. They are in the recruitment market, where companies are known to pay tens of thousands of dollars for recruitment leads. And in that regard, they still aren't even exploiting their position as much as they could be (which means they have a lot of room to grow both out and up)

If they wanted to impress skeptics they could cut back all sales and marketing and development and just bank the 450M and pay out a dividend, in which case it would be a market cap of ~$4B, and a lot more love in comment threads on the internet :)

Re: LNKD IPO opens huge at $83

#128

Post by abofh »

The CEO commented that he was "happy" with the IPO price. Given that CEO's generally are not happy with leaving 100% on the table, I would surmise he knows it's overvalued.

Re: LNKD IPO opens huge at $83

#130

Post by dstein »

brosephius wrote: post #85
dstein wrote: post #79

Earlier quoted context omitted.

They probably are, but what I mean is they could use some 3rd party to short their own shares. We're talking about people that can rob the US government of a trillion dollars in plain sight.

what 3rd party? banks usually are the third party in these sorts of transactions.

Through an under the table deal with any hedge fund, or any number of other means, an investment bank that owns LinkedIn shares could quite easily insure their profits. That is exactly what these businesses do.
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