LinkedIn executives are saying they expect to raise 30 percent more in their company’s initial public offering even before it hits the market. This has some investors eager to get on board and others wary of a new social media bubble, similar to the “Tech Bubble” of 2000.
Sure, LinkedIn is one of the major social media players of the 21st century, but there si no way of knowing how long that may last. Look what happened to Friendster and MySpace. Just because a social media network is big today is no guarantee it will be big tomorrow. If there is anything we have all learned about social media it is the transient nature of the system. Social media, is by its very nature, fluid. It floats on the waves of public opinion. What is hot today, might be NOT tomorrow. Although to be fair LinkedIn, because it focuses only on busines sprofessionals, does not drift and float as much as some of the others. They have a well defined course plotted and have been sticking to that course steadfastly. Perhaps that will bode well for their company and for the investors that buy their stock.
The company, which operates a website where professionals connect with one another, now plans to sell shares at $42 to $45 each, up from a previous range of $32 to $35. The IPO is expected to price toward the upper end of the revised range, a source familiar with the situation said, but added that no final decisions have been made. The source declined to be named as the information is not public.
At the middle of the new range, the nine-year-old company would be valued at $4.11 billion.
The new price range values LinkedIn at almost 17 times its 2010 revenue. That is about half the valuation multiple that investors are giving to Facebook, which is expected to go public in April 2012 and now has a market value of around $70 billion.
Both companies are expensive compared with other tech stalwarts, including Google Inc, whose shares trade at about six times revenue.
To some investors, LinkedIn’s valuation is too high.
“I wouldn’t touch the stock, I wouldn’t own it, not at $45, not at $43,” said Eric Jackson, managing member at hedge fund Ironfire Capital.
He might be willing to buy it at a much lower price, like around $25 a share, he added.
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