6 ms·

LinkedIn Prices IPO At $32 To $35 Per Share

57 points by acrum 15y ago

Maro 15y ago
LinkedIn is worth 94,498,627 * $32 = $3B and the co-founder still owns 21%. It had Q1 revenue $94M, Q1 net income $2M.
- justincormack 15y ago
  Or worth about $30 per user, if you want to look at it like that.
- aquark 15y ago
  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?
  - iamjustlooking 15y ago
    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/AMZN/pe_ratio http://ycharts.com/companies/GOOG/pe_ratio http://ycharts.com/companies/GOOG/pe_ratio Edit: Worked it out, GOOG was 154.29 and AMZN was 657.75
  - svrocks 15y ago
    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
  - horatiumocian 15y ago
    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.
- orijing 15y ago
  Didn't see this before I posted my comment. Don't you need to add the new shares being issued?
whyleyc 15y ago
There's an interesting analysis of which web company is worth the most per user at http://neptune.observer.com/node/138871 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 - $1.56
- eli 15y ago
  I know very little about the stock market, but isn't the individual share price totally meaningless on its own?
  - reitzensteinm 15y ago
    It is, but the above list is per user, not per share, which certainly has meaning.
  - corin_ 15y ago
    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.
  - pstack 15y ago
    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.
    - eli 15y ago
      Got it, thanks.
- AlexandrB 15y ago
  I 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.
wildmXranat 15y ago
Of all the Social* out there, LinkedIn seemed the most purpose driven. The real issue with it is that there is no benefit in being a member of it. It matters to firms and recruiters and if that wasn't shitty enough, LinkedIn will rank higher in search engine results for your name that something you might have published yourself. In return, I give employees bonus points for getting to the top of search results on their own, using their own skills and not a fill-in the blanks template profile site. 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.
- corin_ 15y ago
  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.
- ThomPete 15y ago
  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.
JoachimSchipper 15y ago
> 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.
- justincormack 15y ago
  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.
- pbreit 15y ago
  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.
cheez 15y ago
Too high. They should learn from Bill Gates.
- cheez 15y ago
  Why downvoted? Bill Gates insisted on having a lower IPO...
- cheez 15y ago
  Replying to myself: I misread it as saying 1.75 BILLION, not 175 million. In that case, never mind :D
dstein 15y ago
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.
- orijing 15y ago
  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.
  - dstein 15y ago
    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.
tocomment 15y ago
When is this ipo?
- tocomment 15y ago
  I don't get you guys. I think this is a very reasonable question.
orijing 15y ago
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
- c2 15y ago
  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.

57 points by acrum 15y ago

Maro 15y ago

LinkedIn is worth 94,498,627 * $32 = $3B and the co-founder still owns 21%. It had Q1 revenue $94M, Q1 net income $2M.

justincormack 15y ago
Or worth about $30 per user, if you want to look at it like that.
aquark 15y ago
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?
- iamjustlooking 15y ago
  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/AMZN/pe_ratio http://ycharts.com/companies/GOOG/pe_ratio http://ycharts.com/companies/GOOG/pe_ratio Edit: Worked it out, GOOG was 154.29 and AMZN was 657.75
- svrocks 15y ago
  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
- horatiumocian 15y ago
  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.
orijing 15y ago
Didn't see this before I posted my comment. Don't you need to add the new shares being issued?

whyleyc 15y ago

There's an interesting analysis of which web company is worth the most per user at http://neptune.observer.com/node/138871 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 - $1.56

eli 15y ago
I know very little about the stock market, but isn't the individual share price totally meaningless on its own?
- reitzensteinm 15y ago
  It is, but the above list is per user, not per share, which certainly has meaning.
- corin_ 15y ago
  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.
- pstack 15y ago
  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.
  - eli 15y ago
    Got it, thanks.
AlexandrB 15y ago
I 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.

wildmXranat 15y ago

Of all the Social* out there, LinkedIn seemed the most purpose driven. The real issue with it is that there is no benefit in being a member of it. It matters to firms and recruiters and if that wasn't shitty enough, LinkedIn will rank higher in search engine results for your name that something you might have published yourself. In return, I give employees bonus points for getting to the top of search results on their own, using their own skills and not a fill-in the blanks template profile site. 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.

corin_ 15y ago
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.
ThomPete 15y ago
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.

JoachimSchipper 15y ago

> 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.

justincormack 15y ago
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.
pbreit 15y ago
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.

cheez 15y ago

Too high. They should learn from Bill Gates.

cheez 15y ago
Why downvoted? Bill Gates insisted on having a lower IPO...
cheez 15y ago
Replying to myself: I misread it as saying 1.75 BILLION, not 175 million. In that case, never mind :D

dstein 15y ago

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.

orijing 15y ago
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.
- dstein 15y ago
  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.

tocomment 15y ago

When is this ipo?

tocomment 15y ago
I don't get you guys. I think this is a very reasonable question.

orijing 15y ago

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

c2 15y ago
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.