LNKD IPO opens huge at $83 • Hacker News Board

Re: LNKD IPO opens huge at $83

#91

Post by 3am » Thu, May 19, 2011, 4:43 PM UTC

3am wrote: post #23

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.

Based on there IPO prospectus from sec.gov: Year; Revenue; Costs; Income 2008; 78,773; 84,282; (4,522) 2009; 120,127; 123,482; (3,973) 2010; 243,099; 223,523; 15,385 expense growth is 46%, 82% yoy. revenue growth is 52%, 103% yoy. So, you have a company that is growing revenue faster than expenses, has 100% year over year revenue growth, and has just hit the inflection point to be profitable... and you want to place…

And just to be clear, an incredibly easy ballpark valuation would be to just take the midpoints of the rev / cost growth and go 3 years out... which gives $1.3B revenue on $1.1B costs = $200M profit. A slightly high market multiple on that (18) would still be only $3.6B. And there will be dilution, selling pressure from insiders whose lockup periods will be ending, lumpiness in the numbers... I certainly would not buy LNKD valued at $8B.

But... I will say that I would be encouraged if I were a shareholder by this:

'The company' chief executive officer, Jeffrey Weiner, said in an interview that he wasn't placing much importance on how his company's stock performed on its first day. Mr. Weiner's stake in the company is now worth more than $200 million.

"To be honest with you, I didn't give a lot of thought to what the opening would be like," Mr. Weiner said. "This isn't necessarily indicative of anything. The market will do what it will do. What we are completely focused on is our long-term plans and our fundamentals, and getting that right."'

(http://online.wsj.com/article/SB1000142405274870481660457633...)

Re: LNKD IPO opens huge at $83

#92

Post by UncleOxidant » Thu, May 19, 2011, 4:44 PM UTC

pbreit wrote: post #81

Everyone here should be ecstatic about this development. Perhaps the most talented, savvy and generous angel investors now has $1 billion.

On paper.

Re: LNKD IPO opens huge at $83

#93

Post by rbranson » Thu, May 19, 2011, 4:46 PM UTC

portman wrote: post #21

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.

>>*"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.

Re: LNKD IPO opens huge at $83

#94

Post by gojomo » Thu, May 19, 2011, 4:51 PM UTC

kmfrk wrote: post #84

gojomo wrote: post #65

Earlier quoted context omitted.

Those who downvote the lessons of history are doomed to repeat them.

And what lessons are they? People should educate everyone on why we have a bubble with arguments instead of shouting "bubble! bubble!", every time people discuss the finances of start-ups. Hitler! 1984! Communism! Statements aren't arguments.

I'm not shouting 'bubble'. 1995 was not a bubble. Even given their record-breaking IPO pop, Netscape may have been underhyped at that time – given all that was to come, and despite how things ultimately turned out for 'Mosaic Communications Corporation'.

So one potential lesson from parallels to the NSCP 1995 IPO is that there may be 4-5 exciting years ahead.

Re: LNKD IPO opens huge at $83

#95

Post by blantonl » Thu, May 19, 2011, 4:55 PM UTC

antidaily wrote: post #58

blantonl wrote: post #37

Earlier quoted context omitted.

I'll tell you what happens. Recruiters and third parties sign up in droves for the sole purpose to spam the userbase, which ultimately drives members away from the site. LinkedIn earned their 100 million users by providing a professional networking platform where the users could choose who they network with. When the userbase has less of a choice regarding who contacts them, they'll abandon linkedIn as fast as a teen…

Recruiters and third parties have already signed up. Everyone uses it. That's the point.

If that is the case, then where is the revenue growth going to come from?

Re: LNKD IPO opens huge at $83

#96

Post by run4yourlives » Thu, May 19, 2011, 4:56 PM UTC

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 you can get in now you probably will make some money, but don't ever fool yourself into thinking this has bearing whatsoever on anything but your position in the pyramid. This will come crashing down. LinkedIn is NOT a $4 Billion company. It's just a matter of when.

Re: LNKD IPO opens huge at $83

#97

Post by johnohara » Thu, May 19, 2011, 4:58 PM UTC

Main Street investors clamored for the job networking site's stock, which had only been available to the country's biggest mutual funds, pension funds and other major institutional investors in Wednesday's IPO.

This was from a story on Yahoo finance today. Seems Main Street investors weren't welcome yesterday. Their demand for shares today could well be driving the price. I like LinkedIn, but this feels unduly speculative.

Re: LNKD IPO opens huge at $83

#98

Post by 3am » Thu, May 19, 2011, 5:00 PM UTC

As usual, Paul Kedrosky has some of the best observations:

http://www.bloomberg.com/blogs/paul-kedrosky/2011/05/some-li...

Re: LNKD IPO opens huge at $83

#99

Post by joezydeco » Thu, May 19, 2011, 5:04 PM UTC

sanswork wrote: post #57

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?

They get a chunk of the other 300m.

A recurring chunk, you mean. =)

Re: LNKD IPO opens huge at $83

#100

Post by jeffreymcmanus » Thu, May 19, 2011, 5:08 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…

News flash: every company's stock value is based on demand for its stock. This is how the price for everything is set.

Maybe when we discover true stock-picking clairvoyance this will change and every stock's price will be based on its true future potential, but I wouldn't hold my breath waiting for this to happen anytime soon.