8 ms·
LNKD IPO opens huge at $83
- dodo53 15y agoSuppose there is a tech/social web bubble, is there anything anyone would advise for starting your own startups? E.g: stick with the day job; bootstrap rather than take money; postpone and launch in 2 years; get in fast while the hype is still there? Any startup survivors from the last one wish they'd done things differently?
- blakeweb 15y agoIt's mainly the investors that lose out from a bubble bursting--one way to look at it is that a bubble is just a good time to get a high valuation from a company's perspective. By calling it a bubble, you're saying you think there's more money out there looking for startups to invest in than startups whose prospects can support that valuation. That's a good time to get OPM (other people's money) and spend it on whatever your dream idea is, if you think you've got a shot at making it work. There are of course counterarguments: - Other startups are getting too much money at the same time you are, and probably spending it in irrational ways that may make it harder for you to be profitable, such as overpaying on advertising and hiring. The same argument can support the idea that the best time to start a startup is during a recession, when the big companies aren't investing enough money in growth. - When the bubble bursts, there will be far more startups looking for money than money looking to be invested, so you're more likely to have to throw in the towel after bursting. On the balance, I agree with the advice of most experienced entrepreneurs I've heard--err on the side of worrying more about yourself, your idea, and how you'll execute, and less about the economic environment at the time.
- suking 15y agoAlmost $100/user, not even including active users... that is insanity.
- nodata 15y agoIf* LinkedIn becomes a key part of most companies' recruiting process, then it's undervalued. (* Yeah yeah, right now it's not)
- jamesbressi 15y agoI don't think it is a matter of if, rather "when". Recruiters I know much prefer to find candidates on LI vs Monster and other services and I have a feeling this is only going to broaden and the appeal will continue to rise as future offerings and updates to employers likely roll out. And, agreed that a price tag of $100 a head, if you will, is cheap in terms of value for marketing and recruiting/employment services. On a side note, how I let this fall from my radar to get in on the rush at the bell and sell by lunch is beyond me. I hope others here weren't so lazy and picked up some cash.
- nikcub 15y ago4500 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)
- DocSavage 15y agoAt times like this I'm tempted to short the stock, or at least wait a month or longer until there's sufficient shares to short and not immediately get squeezed. It's just that unlimited downside, investor euphoria on social networking, and volatility makes me too nervous to do it.
- wladimir 15y agoIf the unlimited downside scares you, why not buy put options?
- desigooner 15y agoI think Options won't be available until May 27th so that they can count the # of actual shareholders, etc.
- chopsueyar 15y agoAny recommendations for an options provider?
- deleted 15y ago[deleted]
- DocSavage 15y agoI probably should and wonder whether the price of put options gets inflated due to all the people who want to short? I could also put stop limits but the volatility makes that worse than options.
- ericwaller 15y agoThe current valuation is ~$8.5 billion, wikipedia puts them at ~100 million users. That works out to be ~$85/user.
- extramoose 15y agoThe least they could do is buy each user a nice steak.
- il 15y agoDon't worry, it only took an hour after your comment for the stock to break $100 and their valuation is now a cool $10 billion. The way this stock is moving now, a stock price of $83 seems downright conservative.
- mikeryan 15y agoThe current valuation has jumped about 15-25% (from 88 to 110 per share) in the 10 minutes I've been watching it. right now's not the time to pick nits on their valuation this whole thing is going to be completely out of whack for a while.
- ericwaller 15y agoThe comment I was replying to originally had "almost $1k/user".
- pauldisneyiv 15y agoImagine a Facebook IPO that reached $100 per user...
- HardyLeung 15y agoNot hard to imagine. 700M users at a $70B valuation = $100 per user. I guess that's why how the current valuation of LinkedIn comes about. And if you use this metric, and believes that LinkedIn's growth potential is significantly stronger than Facebook, you could even argue that LNKD is still way undervalued. BTW I made a Tagxedo (word cloud) of this morning's LinkedIn News, and one prominently featured word explains all (the word starts with "F" and ends with "k" :D) http://daily.tagxedo.com/may-20-linkedin-rockets-skyward-in-initial-pu http://daily.tagxedo.com/may-20-linkedin-rockets-skyward-in-...
- AlbertoE 15y agoWhy? What does that have to do with anything? So lets assume I enter into linked in the fact that I have a 100 professional people who won't spit on my name, my employment history and some recommendation blurbs. How much is that worth to a hiring manager screening employees? Out of 20 candidates for a job its not worth much, but if they want to extend an offer its worth something. Also assume job switching every 2 years. So every couple of years some sucker would be willing to pay for that information. The thing I find funny is that the upgraded accounts that linked in flogs are violating your privacy for extra money. Can I check a "Not linked in's bitch" check mark?
- yoseph 15y agoRound 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?
- mhp 15y agoShouldn't you be elated? If this is a repeat, just do what you wished you had done the first time around and Step 3. Profit!
- bemmu 15y agoLatest 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 would be bubbles. He brought up one such bubble in a lecture in front of the students, explaining to them that their investment made no sense considering the average dividend. He expected this explanation to crush the bubble since now everyone was aware of it. What happened instead was students going "wow, a bubble, I must get in on it!" and the stock just going even higher.
- smokeyj 15y agoPeople 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.
- radicaldreamer 15y agoI don't think people treat money they see on a screen or on a receipt like cash either. There's a mental disconnect.
- blantonl 15y agoLinkedIn 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.
- portman 15y ago>>*"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.
- joezydeco 15y agoHow much of that goes to crystal trophies and high-fiving brokers that made the deal happen?
- sanswork 15y agoThey get a chunk of the other 300m.
- joezydeco 15y agoA recurring chunk, you mean. =)
- joezydeco 15y agoActually it looks like more a chunk: "By underpricing the stock, Morgan and BOFA gave their best institutional clients a gift of at least $175 million" http://www.businessinsider.com/linked-in-ipo-2011-5-b http://www.businessinsider.com/linked-in-ipo-2011-5-b
- lefstathiou 15y ago7% 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%
- chopsueyar 15y agoListed at $45 initially. There will be less Aeron chairs this time.
- georgemcbay 15y agoThe Mirra chair is more comfortable. And cheaper.
- nikcub 15y agocalled it: http://news.ycombinator.com/item?id=2563481 http://news.ycombinator.com/item?id=2563481 should have put a lot of money on that. I think it will hit $18-20B market cap in no time
- mhp 15y agoYou couldn't have actually put a lot of money on it (unless you bet one of your friends, or in the unlikely case that you or your family member works for LinkedIn). The trick with IPOs is that even if you had the shares earlier, you couldn't sell them today because of the six month lockup period. The only way for you to get in would be right now at ~$80.
- nikcub 15y agothat is true if you want to directly purchase shares, but there were market makers and other outlets offering CFD's and derivatives at just above the list price. judging by the volume (9M traded so far, which is more than what was listed) there seems to be a lot of that going on
- brosephius 15y ago>there were market makers and other outlets offering CFD's and derivatives at just above the list price do you have an references for that? were these offerings available to small retail investors?
- nikcub 15y agoI have an accounts with a number of these guys, but I specifically found LNKD at CMC and ICM last night
- tristanperry 15y agoI was going to type a fairly lengthy comment, but I think I'll just do a one sentence sum-up (and hope I don't get downvoted for it!): This is yet another strong piece of evidence that we're in a bubble.
- kmfrk 15y agoYou should have gone for the long comment.
- deleted 15y ago[deleted]
- stevenj 15y agoTwo quotes: "Let's start by defining 'investing.' The definition is simple but often forgotten: Investing is laying out money now to get more money back in the future — more money in real terms, after taking inflation into account." [1] -Warren Buffett "Over the long term, it's hard for a stock to earn a much better return than the business which underlies it earns. If the business earns 6% on capital over 40 years and you hold it for that 40 years, you're not going to make much different than a 6% return — even if you originally buy it at a huge discount. Conversely, if a business earns 18% on capital over 20 or 30 years, even if you pay an expensive looking price, you'll end up with a fine result." [2] -Charlie Munger - - - [1] http://money.cnn.com/magazines/fortune/fortune_archive/1999/11/22/269071/ http://money.cnn.com/magazines/fortune/fortune_archive/1999/... [2] http://ycombinator.com/munger.html http://ycombinator.com/munger.html
- RockyMcNuts 15y agoThose are really important and good points...but they're also why the two amigos don't invest in tech - hard to predict if LinkedIn will be around and in what form in 20 or 30 years - Munger's statement is true if the company can keep reinvesting capital at that ROE over a long time period. In fact, beyond an inflection point, a company like Microsoft or LinkedIn can become a natural monopoly and increase revenues and profits a lot with relatively little capital - there are actually INCREASING returns to scale. Which is what LNKD investors are apparently betting on. Tech investing is more about the Next Big Thing, who is the next Microsoft or Google, and less about is there some moat that lets them earn 18% on capital and keep reinvesting the capital over a long period, which is where Buffett is a master.
- deleted 15y ago[deleted]
- iamelgringo 15y agoThere's going to be a lot more angels running around town the next few years with money to invest. Things are going to get very, very interesting. Next up, Zynga, Twitter, Facebook, Yelp, Pandora...
- orijing 15y agoPandora's already public.
- iamelgringo 15y agoLinkedIn’s IPO is viewed by many as a barometer of the public market’s appetite for Internet and social media companies, with the likes of Facebook, Groupon, Pandora and Kayak expected to IPO within the next year. Certainly, today’s huge pop in LinkedIn shares sends a signal that the market is once again hungry (if not starving) for tech. ref: http://socialmediaobserver.wordpress.com/2011/05/20/linkedin-shares-soar-in-ipo/ http://socialmediaobserver.wordpress.com/2011/05/20/linkedin... Also: Morgan Stanley, BofA Merrill Lynch, J.P. Morgan may divvy up $21 million to $24 million -- On the horizon: Facebook, Groupon, Pandora http://www.advfn.com/nyse/StockNews.asp?stocknews=BAC&article=47759182&headline=investment-banks-profit-from-social-media-bonanza http://www.advfn.com/nyse/StockNews.asp?stocknews=BAC&ar...
- alex1 15y agoThe IPO should have probably been priced a little higher. Closer to $70 or $80, given this type of demand. The people that were in on the IPO got a very nice return this morning, provided the stock price stays this high for a little while. Also, LinkedIn would have raised something closer to $700 million or more, had the IPO been priced more accurately. Does anyone know who the underwriters were?
- Aloisius 15y agoMorgan Stanley, Merril Lynch, BofA and JPMorgan I believe.
- gojomo 15y agoIt's August 1995 again! http://en.wikipedia.org/wiki/Netscape#Early_years http://en.wikipedia.org/wiki/Netscape#Early_years
- deleted 15y ago[deleted]
- gojomo 15y agoThose who downvote the lessons of history are doomed to repeat them.
- kmfrk 15y agoAnd 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.
- gojomo 15y agoI'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.
- joeburke 15y agoI only see people downvoting a flawed analogy.
- dstein 15y agoReally the only people making any money here are the underwriter and venture capitalists who took this company public - the guys who pumped up and are now dumping these shares. While they're high fiving eachother with a job well done it's setting up the exact same crash that happened last time.
- brosephius 15y agothere's a lockup period, nobody is selling their pre-IPO shares now.
- deleted 15y ago[deleted]
- dstein 15y agoThat would prevent insiders and common shareholders from selling their shares, but it would in no way prevent an investment bank from unloading their shares through some sort of intermediary.
- brosephius 15y agoyou mean the underwriters of the IPO are not subject to a lockup period? that seems unusual, but I'd believe it I guess.
- dstein 15y agoThey 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.
- brosephius 15y agowhat 3rd party? banks usually are the third party in these sorts of transactions.
- dataminer 15y agoCan someone explain why stock opened at $83 when it was offered for $45.
- brosephius 15y agothere was higher demand for the shares than anticipated?
- dataminer 15y agoThe chart at google finance displays the price was $83 on 9:30 when the volume was 0. I can understand the price rising due to higher demand but not the discrepancy in google finance chart when the volume was 0.
- brosephius 15y agothat's where it opened. the $45 price is where stock was bought before it started trading publicly; once the stock opened on the nyse it first changed hands at $83.
- pbreit 15y agoWhen a new issue is offered to the market, after it is priced but before it actually starts trading, all of the buyer and seller interest is consolidated to determine what price point would result in there being an equal amount of buying and selling. And that becomes the opening price.
- ChuckMcM 15y agoSure, and IPO is essentially a sale of an unpriced piece of equity. Nobody knows really how much its worth but as with earlier funding rounds various techniques try to estimate the value going out the door. That value is the combination of "price per share" * "total outstanding shares" so the total value of the company. The company registers to sell a certain number of shares, this is additive to the total number outstanding, so once you have what will be the new total, and what you think will be the value of the company, you divide value by total and that is your price per share. Then you go out on a 'road show' where you talk to various other banks and other investors and you say "We think the company is worth between X0$ and X1$ for these reasons and that is a share price of between $Y0 and $Y1, would you be interested in buying shares?" and they may say "Not really." or "Sure we'd love to by n shares at $Y0 and maybe n1 (often less than n) shares if it was at the high end of $Y1" Now at some point on this road show, if you're good and the company's prospects look great, you have people who have signed up to buy all your shares, even if it comes out at the higher price. That has validated your price point, now if you haven't even talked to half your prospects you might decide to raise the offering price or increase the number of shares, you go back and call the folks who committed before and make sure they are still on board. Now you have a list of people who are willing to buy your stock, and then when the market opens you sell them that stock at the high end price, and collect your money. Now those people (and the bank that is the 'market maker') for the stock may be willing to sell the stock for a premium over what they paid for it. Other investors who have read the S-1 but weren't part of the initial roadshow might say "I'd buy this stock even if it was 20% higher than that initial price." and they put in a buy order for it, someone says "Hey a quick 20%! I'm down!" and sells them the stock they bought at the IPO price from LNKD. The price bounces around and then lands at a point where nobody else is willing to buy it for any more money than it is being offered at. Nominally the 'market' price for that company. Now if people start buying the stock for any price because they just "want in on the action." as it were, then the price can rise above the price that is supported by the fundamentals of the company, and that is a speculative price rather than a market price. Stocks priced on speculation define a bubble. So LNKD priced at $45 I think, they had more demand than they could meet, and the price has risen. Are speculators buying it? Hard to know yet but it seems like there is some speculation going on.
- emilhajric 15y agoWOW it's now at 108.47 +63.47 (UP BY 141.04%)
- random42 15y agoIt poses a question I suppose. Does it makes sense for FB to go public ASAP? Wall street obviously seems bullish on social networking websites.
- pbreit 15y agoEveryone here should be ecstatic about this development. Perhaps the most talented, savvy and generous angel investors now has $1 billion.
- UncleOxidant 15y agoOn paper.
- Apocryphon 15y agoWhich money is made of.
- yuvadam 15y agotouché
- run4yourlives 15y agoThis 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.
- jeffreymcmanus 15y agoNews 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.
- run4yourlives 15y agoThe demand however is based on "expert analysis" that suggests that LinkedIn is worth 4 billion dollars. I don't have an issue with demand setting the price; I have an issue with that demand being justified by linking it back to the potential performance of the company in such a way that anyone with half a brain can seen is bordering on the ludicrous. If the problem was limited to investors that were prepared to take risks and pay for their own loses that would be one thing. The issue I have is that when these things do come crashing down, it seems to hurt everyone but wall street.
- nikcub 15y agoYou know what is ludicrous? That LinkedIn is on for $400M this year and has doubled its revenue each of the past 3 years That is ludicrous
- johnohara 15y agoMain 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.
- 3am 15y agoAs usual, Paul Kedrosky has some of the best observations: http://www.bloomberg.com/blogs/paul-kedrosky/2011/05/some-linkedin-lessons-implications.html http://www.bloomberg.com/blogs/paul-kedrosky/2011/05/some-li...
- e13 15y agolinkedin reminds me of Classmates.com
- nikcub 15y agoLinkedIn listed 7.8M shares. So far today, and we are only half way through the day, there have been 29.5M transactions - which means each LNKD stock has been bought or sold on average 4 times edit: wrong multiple
- hvass 15y agoSomebody please tell me you'll be shorting it.
- abofh 15y agoThe 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.
- orijing 15y agoIs he supposed to publicly comment that he's "disappointed" with the IPO price? I think the Youko CEO did something like that, and just embarrassed himself for being naive...
- davidhperry 15y agoYou're correct, according to Henry Blodget at Silicon Alley Insider. The CEO sold some stock last night at $45, which could have been sold for $90 this morning. http://www.businessinsider.com/linked-in-ipo-2011-5-b http://www.businessinsider.com/linked-in-ipo-2011-5-b
- adamtmca 15y agoWinner's Curse.
- sampsonjs 15y agoI thought this might be interesting, John Cassisy at the New Yorker claims: "One more cautionary note: Don’t take too seriously the headlines you will see about the market valuing LinkedIn at $8-9 billion. Using the oldest I.P.O. trick in the book, the underwriters only issued 7.84 million shares, thereby creating an artificial shortage. Even at $90 each, the value of LinkedIn’s publicly issued stock is just $706 million. The $8-9 billion figure comes from taking the market price and applying it to the rest of the company’s common shares, more than eighty million of them which haven’t been issued yet. It may well be several years before all of these shares are trading on the open market. At that point, we will have a better idea of what LinkedIn is really worth." http://www.newyorker.com/online/blogs/johncassidy/2011/05/linkedin-ipo-party-like-its-1999.html http://www.newyorker.com/online/blogs/johncassidy/2011/05/li...
- iphoneedbot 15y agoOK, This is the first tangible evidence that we are indeed /now/ in a Bubble!
- zach 15y agoGreat news for related sites too -- I'm thinking of Quora and Namesake. Quora has been able to thrive and create a truly compelling site in a short time, even with LinkedIn Answers having so many numbers in its favor. Namesake has been getting traction and executing well -- their valuation has definitely just gone up as well.
- ataggart 15y agoI'm looking forward to buying some put options.
- lurker20 15y agoInteresting that now, 4 days later, after a brief runup to $115, LNKD is at ~$86, very close to the opening sale.