LinkedIn soars in first day of trading

In a tech stock feeding frenzy reminiscent of the infamous dot-com boom, shares of the business social network, LinkedIn, more than doubled after launching on the New York Stock Exchange, Thursday.

At times LinkedIn stock topped US$100, but closed the trading day at US$94.25 per share, giving the firm a market value close to US$10 billion.

According to research firm Renaissance Capital which specializes in newly public companies, LinkedIn had the most valuable US internet IPO since Google became a publicly traded company in 2004. Renaissance also felt that this showing by LinkedIn could “pave the way for other social networking firms to take the IPO plunge”.

The career and business oriented online social networking service launched its stock at $45 per share at the start of the day.

“It’s just really good timing, when everybody’s paying attention to technology in a new light”, US market analyst Marc Pado said.

After hiking its initial public offering (IPO) price by 30% to take advantage of a demand for the first major US social network firm to go public the company had raised some US$353-million from investors on Wednesday.

The IPO launch price was far higher than the US$32-35 range announced just a week earlier which then had valued the company at US$4.25-billion.

LinkedIn had revenues of US$243-million and a net profit of US$3.42-million last year.

The LinkedIn debut was the first big test of demand for internet stocks in years. The fervor to get hold of the shares raised comparisons to the dot-com bubble that famously burst in January 2000, sending the tech-focused Nasdaq stock exchange plummeting.

Investors hunger for stakes in hot social networking firms such as Facebook and Twitter, which have remained private companies while capturing fans and influencing lifestyles around the world. “They want exposure to… social networking companies, and LinkedIn was their first chance”, said Morningstar analyst Bill Buhr. “It looks like everybody took it.”

According to the analyst, LinkedIn reaped the benefit of being a “proxy” for Facebook and Twitter in the eyes of investors. “That’s got to be part of what’s driving this,” Buhr said. “It’s not yet a bubble”, he continued. “We need to see what the other firms do.”

It is believed the giant of social networking, Facebook, is planning to go public next year. According to some, it would be placed at value of US$100-billion.

As per analysts, it will be important to see whether LinkedIn lives up to investors hopes in the coming year or two.

However, Morningstar advised investors that it felt LinkedIn shares were overpriced.

Senior analyst for Morningstar, Rick Summer wrote in an online post, “the industry is young, but we are very positive on the prospects for the company… still, even good companies should be bought for less than they are worth.”

A possible “crystal ball” for LinkedIn’s prospects is China’s largest social network, Renren,which on May 4th went public at an IPO price of US$14. The shares then soared in the first few days of trading, but since have fallen and closed Wednesday at US$13.70.

LinkedIn brings together people online to cultivate and manage their careers and business networks and has more than 100 million members in over 200 countries and territories, 44 million in the US alone.

The California company launched in 2003 and is said to be raising money to fuel its further expansion. — AFP