LinkedIn Prices IPO At $32 To $35 Per Share(techcrunch.com)
techcrunch.com
LinkedIn Prices IPO At $32 To $35 Per Share
http://techcrunch.com/2011/05/09/linkedin-prices-ipo-at-32-to-35-per-share-expects-146-6m-in-net-proceeds-from-offering/
45 comments
As far as I am aware LinkedIn have been profitable for a while even before the news features.
They have 100 Million users
Loads of data
It's invaluable for employers like myself.
I have several times been contacted with regards to jobs by recruiters and I can see they went to my account.
It's a great verification tool
Their API's are pretty cool.
To me LinkedIn is the one social network that shuts up and just let me build relationships without asking me to participate every day.
So I think your characterization is unfair and wrong.
LinkedIn is going to be around for a long time.
They have 100 Million users
Loads of data
It's invaluable for employers like myself.
I have several times been contacted with regards to jobs by recruiters and I can see they went to my account.
It's a great verification tool
Their API's are pretty cool.
To me LinkedIn is the one social network that shuts up and just let me build relationships without asking me to participate every day.
So I think your characterization is unfair and wrong.
LinkedIn is going to be around for a long time.
They have 100 million users because it's impossible to close an account.
It's not impossible at all; I closed my account last year.
https://help.linkedin.com/app/answers/detail/a_id/63
https://help.linkedin.com/app/answers/detail/a_id/63
I found it impossible to do so some years ago, and my account has been left dormant ever since as a result. I'm sure I'm not the only person who faced this problem.
YES! It was impossible for me to close my account.
I emailed them repeatedly and they claimed my account was closed. Then someone sent me a message (because my account was still appearing on the site..) and it REOPENED my account and I started getting email about it again. LinkedIn is the WORST.
I emailed them repeatedly and they claimed my account was closed. Then someone sent me a message (because my account was still appearing on the site..) and it REOPENED my account and I started getting email about it again. LinkedIn is the WORST.
I agree with @ThomPete. The value I get from it is:
- Ideal for work colleagues especially from previous work. I keep my Facebook to IRL friends and Twitter is fully open but linked in is that nice middle ground for colleagues.
- Weak connections - I subscribe to the RSS feed of updates, filtered out new connections and when someone joins a new firm or gets a new title, I just send them an email with a congratulations. Like Facebook news, an update can prompt a catch-up that I would not have thought of before
- Groups - groups are a lot more focused and active than Facebook. I have had good responses and engagement to blog posts and participated in some good discussions in niche areas like NFC security or security architecture, security in agile development
- Recruitment - as Thom says I have had recruiters contact me based on Linked in. Most people are hesitant to provide a written reference but on linked in I have got quite a number of recommendations which are basically the same thing.
- 2nd and 3nd contacts at prospective clients / firms - if you are considering joining a new company you can see who in your network knows someone that works there.
I think they will continue to do well and could be one of these IPO's that provide a lot of value to early investors.
- Ideal for work colleagues especially from previous work. I keep my Facebook to IRL friends and Twitter is fully open but linked in is that nice middle ground for colleagues.
- Weak connections - I subscribe to the RSS feed of updates, filtered out new connections and when someone joins a new firm or gets a new title, I just send them an email with a congratulations. Like Facebook news, an update can prompt a catch-up that I would not have thought of before
- Groups - groups are a lot more focused and active than Facebook. I have had good responses and engagement to blog posts and participated in some good discussions in niche areas like NFC security or security architecture, security in agile development
- Recruitment - as Thom says I have had recruiters contact me based on Linked in. Most people are hesitant to provide a written reference but on linked in I have got quite a number of recommendations which are basically the same thing.
- 2nd and 3nd contacts at prospective clients / firms - if you are considering joining a new company you can see who in your network knows someone that works there.
I think they will continue to do well and could be one of these IPO's that provide a lot of value to early investors.
I find it to be a tool to find and research prospective employees. I've hired multiple programmers from the site; some I found on LinkedIn, some I've looked up more information on someone who sent me their resume.
Like most tools, they are largely worthless unless you know how to use them properly...
Like most tools, they are largely worthless unless you know how to use them properly...
Why is it worth $x? Simply put, because that's what they will be able to sell at. As to why that is, one could argue that it is in part because of a tech bubble, but the most obvious and simple reason is indeed the rate of growth in their revenue and profit.
I do disagree with your view that there is no benefit to being on LinkedIn. Personally, both my personal website (very low traffic bio site with a few blog posts) and twitter account are ranked above LinkedIn, and I like that LinkedIn is ranked third (that's for a search of my name on Google).
I've never hired or been hired through LinkedIn, but people I want to work with (usually future clients) and people who consider working with me (again, clients) can look me up, and my LinkedIn page helps verify who I am, and what I do, they can see a few endorsements people have given me, and often they can see who they know that knows me.
Also, after meeting someone at an event, a follow up LinkedIn reequest reminds them who you are and helps connect your face to your business card - and visa versa, helps you connect their face/job/etc to their card.
I do disagree with your view that there is no benefit to being on LinkedIn. Personally, both my personal website (very low traffic bio site with a few blog posts) and twitter account are ranked above LinkedIn, and I like that LinkedIn is ranked third (that's for a search of my name on Google).
I've never hired or been hired through LinkedIn, but people I want to work with (usually future clients) and people who consider working with me (again, clients) can look me up, and my LinkedIn page helps verify who I am, and what I do, they can see a few endorsements people have given me, and often they can see who they know that knows me.
Also, after meeting someone at an event, a follow up LinkedIn reequest reminds them who you are and helps connect your face to your business card - and visa versa, helps you connect their face/job/etc to their card.
There's an interesting analysis of which web company is worth the most per user at http://neptune.observer.com/node/138871 - LinkedIn ranks 3rd on their list of 9 arbitrary companies:
Groupon - $210
Facebook - $105
LinkedIn - $33.33
Zynga - $25.58
Twitter - $18.05
Foursquare - $20
Tumblr - $15
Skype - $1.56I find it interesting that a Groupon user ends up being so highly valued by the market. I wonder if it's because Groupon can make money from each user in ways other than advertising.
I doubt it - Skype is last on the list yet first on the list of paid products. The fact that groupon's rev comes from a percentage of sales doesn't really mean they aren't advertising based, anyway. It's pretty much the same as running CPA (cost per action) ads.
I think common wisdom is that they're valued based on the size of the local ad market and because of how hard it's been for others to break into local.
I think common wisdom is that they're valued based on the size of the local ad market and because of how hard it's been for others to break into local.
Ah, I forgot about Skype. Anecdotally though, most people I know only use the free parts of Skype.
My understanding is that Skype makes the bulk of their money off of international calls bridged Skype to that country's local telephone service (which is often substantially less than calling cards, or direct long distance).
I know very little about the stock market, but isn't the individual share price totally meaningless on its own?
That isn't the point they're making here, though. They're comparing the valuation with the size of the user base. For example, at $3b for LinkedIn, divided by the number of users they have, it comes to about $33.33 per user. In other words, a sort of very rough market valuation of what the industry thinks the users are worth, I suppose.
Got it, thanks.
It is, but the above list is per user, not per share, which certainly has meaning.
Not totally meaningless, but certainly it doesn't tell you the value of the company unless you know how many shares exist.
However, the comment you replied to isn't about stock prices, it's about the value of each user for each of those companies - user as in somebody who uses those services.
However, the comment you replied to isn't about stock prices, it's about the value of each user for each of those companies - user as in somebody who uses those services.
Of the 7,840,000 shares being offered, 3,012,196 are from existing holders, and the balance (4,827,804) are issued. Therefore, post-IPO, LinkedIn will have 94,498,627 + 4,827,804 = 99,326,431 shares outstanding.
At a median price of $33 per share, that gives LinkedIn an implied valuation of $3,277,772,223, which isn't as high as I'd expected, given Facebook, Zynga, Groupon and Twitter's recent valuations
At a median price of $33 per share, that gives LinkedIn an implied valuation of $3,277,772,223, which isn't as high as I'd expected, given Facebook, Zynga, Groupon and Twitter's recent valuations
Thanks for doing the math. Unless you are currently a shareholder or options holder, market cap is a much more meaningful number then price per share. I'm surprised tech crunch didn't mention it at all.
Three billion might seem low compared to Facebook, but it is actually higher then I expected. I will be a patient outside observer for this IPO to see how Wall Street treats and values social network stocks.
Three billion might seem low compared to Facebook, but it is actually higher then I expected. I will be a patient outside observer for this IPO to see how Wall Street treats and values social network stocks.
LinkedIn is worth 94,498,627 * $32 = $3B and the co-founder still owns 21%.
It had Q1 revenue $94M, Q1 net income $2M.
It had Q1 revenue $94M, Q1 net income $2M.
So the P/E ratio is currently about 398 (optimistically) assuming they earned $2M for each of the last 4 quarters.
Guess that isn't a useful metric for valuing 'social' companies! Anyone know what Google or Amazon's P/E ratio was when they went public?
Guess that isn't a useful metric for valuing 'social' companies! Anyone know what Google or Amazon's P/E ratio was when they went public?
Not sure of the exact number but you can see it on the charts here:
http://ycharts.com/companies/AMZN/pe_ratio
http://ycharts.com/companies/GOOG/pe_ratio
Edit:
Worked it out, GOOG was 154.29 and AMZN was 657.75
http://ycharts.com/companies/AMZN/pe_ratio
http://ycharts.com/companies/GOOG/pe_ratio
Edit:
Worked it out, GOOG was 154.29 and AMZN was 657.75
I think the most important thing is that they have healthy revenue growth (more than 100%). If they have $90M in revenue per quarter, they can do much better than $2M in net income, if they focus on that, but they are still focusing on growth. If I remember well, LinkedIn predicted a net loss for 2011.
Amazon went public in 1997 for $18/share with 1996 revenues of $16MM and $(6MM) net loss.
Google went public in 2004 for $85/share at about 100 P/E
Google went public in 2004 for $85/share at about 100 P/E
Or worth about $30 per user, if you want to look at it like that.
Didn't see this before I posted my comment.
Don't you need to add the new shares being issued?
Don't you need to add the new shares being issued?
> The company expects [to get] approximately $146.6 million (in total the company will be raising $274 million but some of this money goes to fees etc.).
Is this normal? They paid almost a third of the money they have raised.
Is this normal? They paid almost a third of the money they have raised.
I was a bit perplexed by this, but reckoned it was just bad journalism, and its not all fees, but that some of the existing shareholders are selling some of their shares in the IPO, so Linkedin does not receive that money. A guess, but seems most likely.
Some shareholders are selling in the IPO. It's covered in the post.
It's more common for selling stockholders to sell in a follow-on but not unprecedented.
It will be great to get some liquidity into the hands of fantastic investors like Reid Hoffman.
It's more common for selling stockholders to sell in a follow-on but not unprecedented.
It will be great to get some liquidity into the hands of fantastic investors like Reid Hoffman.
If the valuation starts off so high that means future growth has already been priced in, which means there's no compelling reason for any new investor to buy the shares. The share price will drift downward for years (which happens to most IPO's) unless they can completely blow the doors off with new revenue.
The share price will drift downward for years (which happens to most IPO's)
Do you have data to support that? IPOs are highly volatile, but would surprise me if most IPOs drift downward for years.
Do you have data to support that? IPOs are highly volatile, but would surprise me if most IPOs drift downward for years.
It's just my anecdotal experience. It's pretty easy to prove the IPO market lately hasn't been like it was in the 90's and that's the reason the big tech companies have been staying private.
That correlates to my main question of: why is LinkedIn valuable to the tune of $35 / share? Is it because they just started to rake in some profits for the first time from their job listing service ? Is it the secondmarket hype ? Is it because Sequoia capital has it in their best interest ? Maybe it's just because they re-branded their service as hiring solutions, added value to advertisers and rode the wave that Facebook created.
Do away with it and invest time in making an employee/career profile for yourself. It's a joke how LinkedIn is more of the same that didn't work for employees in the past.