The IPO (initial public offering) for the much hyped social media company LinkedIn will open tomorrow. It seems LinkedIn is planning to sell the share for $45 a piece and will sell around 7.8 million shares and raise around $352 million in the proceedings. Jeff Weiner the CEO of this Mountain View, California-based company is pretty sanguine about its future and so are its current investors. For quite sometime I was wondering about the the business model of this organization and I came to know that LinkedIn valued at around $4 billion makes its money primarily through business subscription which comes in the form of recruiting and the paid subscription which LinkedIn has started in 2005.
Major recruting companies uses the myriad of professional skills databases available on the site of LinkedIn to mine the skill sets of the individual that match their requirement and I guess they need to pay some fee to LinkedIn for this whole process. As of now LinkedIn is firing on all cylinders and we will come to know more about it once the company goes public tomorrow. The stock will start trading on NYSE tomorrow and the ticker for LinkedIn will be LKND. Morgan Stanley, Bank of America and JP Morgan Chase will led the stock offering. Keeping into consideration the IPO of LinkedIn hopefully Facebook, Groupon and Zynga (the creators of very popular Farmville) are the next in line to introduce their IPOs.
It seems more and more companies are going public this year which could be one of the indications that the economy is recovering, other reasons could be that we all are heading for another bubble probably in the field of IT. Currently we are not in the postion to take any stand on that. I bet Nouriel Roubini the famous economist can comment on that, as he along with others was able to predict the current crisis. So far things and looking good and we all would like to keep it that way. Fingers crossed.
Update 1: Shares of LinkedIn (LNKD) are now trading at around $90 a share. This morning (19th May) the shares opened at $83 and their value is increasing since then. It seems investors are buying the shares left and right. With the current scenario LinkedIn is now valued at around $8 billion. Is seems like it is 1999 all over again but we all know how it ended. All I can say is hungry investors of the web 2.0 era seems tireless and are adding tech and social networking to their portfolios. Seems big time ahead for the social networking companies but you never know when the sky will fall down...till then...its party time.
Update 2: It started out yesterday that LinkedIn IPO will be priced at $32 then by yesterday evening the shares were traded in after hours at $45 and when the market opens this morning the shares opened at $83 and gone up as high as $122.70 and then came down at $94.25 at the close of the market. All happening within a span of just 24 hours. The market is just too volatile but not as volatile as the boom of 1999. Still there is hope and we all will make it, no sureties though.
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