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LinkedIn 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
by blantonl 15y ago
LinkedIn 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.
- deleted 15y ago[deleted]
- dman 15y agoMight be a nice time to short, that is if there is someone willing to be on the other side of that trade.
- monochromatic 15y agoThere always is.
- thematt 15y agoNot always. There are some companies that don't have enough liquidity to effectively make that trade or have no investors willing to lend the shares. Not to mention shorting (or options) aren't even allowed yet on this particular stock.
- rrrazdan 15y agoBut in this case there is almost a certainty that people would accept your short. I would.
- brosephius 15y agoexcept that's not how shorting stock works. it's not a person-to-person deal.
- prpon 15y agoIf you want to know, I tried shorting it at 110 just for the heck of it. tdameritrade says 'this stock not available for short sell'.
- deleted 15y ago[deleted]
- brosephius 15y agoand assuming you can find shares to short, and are willing to pay the borrow cost.
- dj_axl 15y agoDuring the first 30 days after an IPO, the underwriters are not allowed to lend shares for short sale. Additionally, number of shares are limited. The entire float is not available on the first day of trading. So today, it is probably impossible to short. 30 days from now, it should be available to short. http://cash.investopedia.com/ask/answers/05/062905.asp http://cash.investopedia.com/ask/answers/05/062905.asp
- spitfire 15y agoput options?
- krishna2 15y agoOptions are available for trading only after a certain number of days (generally 60 to 90 days, but in some cases much earlier than that).
- icedpulleys 15y agoI've heard that larger banks and brokerages (not the underwriters) will start making shares available for shorting as early as Tuesday, which should help ease the share price down.
- tybris 15y agoAs long as people are going short, banks have incentive to keep the price high and rake in the interest, using it to keep inflating the price. Only when everyone has stopped believing the price will go down and stops short selling, then the banks can no longer inflate the price and will let it go down. See oil for an example. Welcome to the rigged game.
- deleted 15y ago[deleted]
- ianl 15y agoIf you read the IPO Filing with SEC, LinkedIn is pouring a lot of there revenue back into company in the form of research and development.
- 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%
- digikata 15y agoI've often thought that there is no need for collusion if you can exchange minimal information over public, legal channels and know how to work a strategy that assumes a modified prisoners dilemma. You can often see oil prices or airline tickets operating that way. E.g when one airline raises prices, then sees that no-one is following the rise, after which the price comes back down. Or everyone else is ready to raise prices and ticket prices go up.
- 3am 15y agoBased on there IPO prospectus from sec.gov: Year; Revenue; Costs; Income 2008; 78,773; 84,282; (4,522) 2009; 120,127; 123,482; (3,973) 2010; 243,099; 223,523; 15,385 expense growth is 46%, 82% yoy. revenue growth is 52%, 103% yoy. So, you have a company that is growing revenue faster than expenses, has 100% year over year revenue growth, and has just hit the inflection point to be profitable... and you want to place a market average P/E on it?
- Aloisius 15y agoExactly. If LinkedIn can make $243M/year selling to recruiters and job seekers in a recession, what do you think happens when we have a global recovery and the inevitable hiring boom comes?
- blantonl 15y agoI'll tell you what happens. Recruiters and third parties sign up in droves for the sole purpose to spam the userbase, which ultimately drives members away from the site. LinkedIn earned their 100 million users by providing a professional networking platform where the users could choose who they network with. When the userbase has less of a choice regarding who contacts them, they'll abandon linkedIn as fast as a teenager terminating his MySpace account.
- antidaily 15y agoRecruiters and third parties have already signed up. Everyone uses it. That's the point.
- blantonl 15y agoIf that is the case, then where is the revenue growth going to come from?
- nl 15y agoNew market segments. LinkedIn is incredibly successful in IT related markets, mostly in the US. It's like when Amazon started, it was very successful selling to people involved with the internet in some professional capacity.
- EwanToo 15y agoFor comparison, in 1999 Webvan IPO'd at $8 billion, with revenue (not profit!) of $395,000 :) http://cnet.co/kIKoMh http://cnet.co/kIKoMh
- chollida1 15y agoThe actual URL the above shortener points to: http://news.cnet.com/2100-1040-232534.html http://news.cnet.com/2100-1040-232534.html
- pbreit 15y agoLinkedIn is not even trying to make net income so it's erroneous to perform much analysis on that number. Yes, it's a lofty number but LinkedIn has been around for quite some time and has very solid and very rapidly growing financials.
- Aloisius 15y agoYeah but they sank all their money into tripling the number of employees at the company and investing in R&D. That's exactly what you want to see if you expect large growth. LinkedIn is clearly focused on long term gains over short term profits.
- nikcub 15y agoPE ratios are for yield businesses that have been around for decades and with nowhere much to go With LNKD you should be looking at revenue, competition and market penetration (rev is doubling yoy, three sources, 4500 business customers paying avg. $23k a year, 75% of fortune 100, 60% USA - which means they have a lot of growing to do). they are spending everything that comes in on product development, sales and marketing and R&D - it is all growth phase. $400M revenue this year. To add - LinkedIn isn't really a 'social' company either since its revenue is not based on ads. They are in the recruitment market, where companies are known to pay tens of thousands of dollars for recruitment leads. And in that regard, they still aren't even exploiting their position as much as they could be (which means they have a lot of room to grow both out and up) If they wanted to impress skeptics they could cut back all sales and marketing and development and just bank the 450M and pay out a dividend, in which case it would be a market cap of ~$4B, and a lot more love in comment threads on the internet :)
- joeburke 15y agoIt means there's a huge potential for that income and revenue to grow.
- webwright 15y agoFWIW, they had 250M revenue last year. 15M in earnings might indicate they are aggressively investing in growth. So if you're going to look at that critically, investigate where the other $235M is being spent.