LinkedIn IPO ... go for it?

[SP33Demon]

Just short that sht.

 

[Demo24]

I tried to short it, nothing available and I'm not surprised. I basically just threw that order out there for the hell of it to see if there might have been a few shares.

 

[SSSnail]

Well I'm prohibited to participate in ipo anyways, but yeah, short it if you can find shares.

 

[Dr. Detroit]

almost 300K. Should cash out at least 1/3 just to be safe.

Employees are blacked out for a good 6-months after the IPO and can not sell.

Plus - I doubt he has vested those 20K shares. He may only have 25% of the shares available to exercise if that........

 

[silverpig]

I believe they generated about $280 million in revenue. Having a valuation nearly 30 times your revenue earnings is just silly though.

Not to mention their profit last year was something like $3.4 million.

The people buying $100 shares of this are either:

1. Short-term speculators or
2. People who see this as facebook rev 2.0 long-term

I'm not a fan of 1, and don't agree with 2, but what do I know? That being said, linkedin seems to be the only social networking site that the users actually pay for.

 

[Kev]

LinkedIn shouldn't be called a social networking site. It's a professional network. Most LinkedIn members never use the site, unless they lose their job and need to look for a new one. It's basically monster.com with a networking aspect. This stock price is utterly ridiculous.

 

[sunzt]

Hmm if LinkedIn got this amount for its IPO, it should start motivating other "social internet" companies to follow.... i can't imagine that would be a good thing... This was how tech bubble started.

 

[TheNinja]

I wouldn't touch this stock...but if I had to pick one way, I'd short it short-term at least. I gotta believe there will be a lot of profit takers once this starts to dip.

 

[HopJokey]

Hmm if LinkedIn got this amount for its IPO, it should start motivating other "social internet" companies to follow.... i can't imagine that would be a good thing... This was how tech bubble started.

Listening to CNBC they think this will foster a lot of innovation, thus creating tons of competition for LinkedIn and others. Thus this is bad for investors.

 

[Ms. DICKINSON]

I thought of RENN and I pulled out. God dammit, totally the opposite.

 

[ultimatebob]

An IPO story of warning... A company that I used to work for (MPath Interactive) went from $14 a day to $50 a day on it's opening trading day. It was one of the top 40 IPO's openings of all time.

By the time employees could trade their shares six months later, it was down to $13 a share. Six months after that, it was $3 a share. A year after that, the company went bankrupt and the stock was trading at 8 cents a share. Yep... 8 cents.

 

[Ghiddy]

So you're asking me why I'm interested in making money?

Didn't ask you shit.

 

[Brigandier]

An IPO story of warning... A company that I used to work for (MPath Interactive) went from $14 a day to $50 a day on it's opening trading day. It was one of the top 40 IPO's openings of all time.

By the time employees could trade their shares six months later, it was down to $13 a share. Six months after that, it was $3 a share. A year after that, the company went bankrupt and the stock was trading at 8 cents a share. Yep... 8 cents.

I'll take 1000 shares, there's nowhere to go but up!

 

[yllus]

An interesting article which, I suppose, only states the obvious:

Business Insider - Congratulations, LinkedIn! You Just Got Screwed Out Of $130 Million

The stock of social-network LinkedIn has had a heck of an IPO debut this morning, popping 90%+ above the IPO price.

That means folks like us get to write breathless stories about how much money investors are making and how everyone's partying like it's 1999.

It also means LinkedIn's underwriters, Morgan Stanley, Bank of America, et al, just screwed the company and its shareholders to the tune of an astounding $175 million. (Just the way the underwriters of another recent hot IPO, Zipcar, screwed that company).

How?

By wildly underpricing the deal and selling LinkedIn's stock to institutional clients way too cheaply.

LinkedIn's stock is trading above $80 a share this morning. Bank of America and Morgan Stanley sold the same stock to their best institutional clients at $45 a share last night. The value of LinkedIn-the-company, it seems safe to say, has not appreciated by 90%+ in the past 12 hours. And that means that, on its underwriters' advice, LinkedIn sold its stock too cheap. It also means that the institutional investors who bought LinkedIn's stock last night are high-fiving each other this morning, celebrating their instantaneous 90% gain. (Lots of them are probably also dumping some stock).

By underpricing the stock, Morgan and BOFA gave their best institutional clients a gift of at least $175 million. And that money came out of LinkedIn's pockets and the pockets of the LinkedIn shareholders who sold on the deal.

(Specifically, assuming a fairer price for the stock would have been about $60, LinkedIn probably left about $130 million on the table. LinkedIn's selling shareholders, meanwhile, left about $50 million.)

And the best part of this screwing is the fact that LinkedIn probably has no idea it got screwed. In fact, the company is probably thrilled with the IPO result. Why? Because they've been told for so long, by so many people, that having a big "first day pop" is what every company should pray for in their IPO.

But it isn't.

Here's a simple analogy:

Imagine if the trusted real-estate agent you hired to sell your house persuaded you to sell it to her best client for $1,000,000 by telling you this was the best price she could get. And then, the next morning, the person who bought your house immediately turned around and sold it for $2,000,000 (using the agent to sell it, naturally).

How would you feel if your agent did that?

Shafted.

And that's EXACTLY what BOFA and Morgan Stanley just did to LinkedIn and LinkedIn's shareholders.

 

[Imp]

Hmm if LinkedIn got this amount for its IPO, it should start motivating other "social internet" companies to follow.... i can't imagine that would be a good thing... This was how tech bubble started.

Article on CNN this morning said that Facebook and Twitter were also rolling out IPOs soon (I thought they were staying private for the foreseeable future). Hello tech bubble-bobble. Analysts have been talking about small cap tech companies in a bubble for months/year+, this is only going to get better. "If Linked-IN making $5 million(???) profit is worth that much, Facebook must be way more, buy buy buy buy!!!!!!"

Too bad solid companies with actual products and bursting with money at the seams like Apple and Microsoft aren't seeing any lift. They'll probably still get f*cked when the pop comes around though.

 

[GotIssues]

Too bad solid companies with actual products and bursting with money at the seams like Apple and Microsoft aren't seeing any lift. They'll probably still get f*cked when the pop comes around though.

If MS or Apple were creating and selling more shares, they'd be shafted. However, if and when the bubble pops and takes down the innocents with them, it only affects those who are selling them, not those sitting on them. The companies are losing market cap and the investors are losing money on paper only. Not a big deal unless they NEED the money right away.

However, by taking innocents down with them, the bubble burst creates fantastic buying opportunities for those who aren't emotional investors or meer speculators. People look at bear markets and terrible and bull markets and great, but to someone with a solid head on their shoulders, it's quite the opposite.

Unfortunately for me, I missed out on the last big run following 2008 because I got shafted and had a long-term run of unemployment (thus had no spare cash to throw at anything except Ramen and Mac N' Cheese). If it happens again, I'm prepared.

 

[silverpig]

An interesting article which, I suppose, only states the obvious:

Business Insider - Congratulations, LinkedIn! You Just Got Screwed Out Of $130 Million

From what I learned in business school, IPOs typically jump in price dramatically on the first day, and then the returns over the next year or two are much less than the stock market average. Basically, you don't want to be holding linkedin at $90.

To go with the house analogy, imagine if that house had faulty wiring and plumbing and needed a ton of work. The person who bought it for $2M just got screwed, and the one who sold it for $1M got fair value.

Also, the way IPOs work, the issuing company ALWAYS takes a hit on the price, and this is priced in as an effective fee for the underwriter. The big banks are the only ones who can manage these kinds of issuances, so it takes a ton of work and costs them a lot of money to do one. They also have to guess at the value of the stock, so they perform their analysis, come up with a share price, then hack off say 20% and that becomes the IPO price. The extra 20% accounts for risk in price and volume, and gives them their profit margin on the deal.

I bet the banks value linkedin somewhere in the $60 range.

 

[Patranus]

LOL - The company made 3 million dollars last year and is now with $9 billion.

Laughable stock price.