May 20, 2011

LinkedIn IPO: Looks Good on Paper

Initial Public Obsession

The online and business world was a tizzy Thursday as the LinkedIn Corporation went public. The initial public offering (IPO) put the stock price at $45 USD. It began the day on the New York Stock Exchange at 83 bucks, rocketed to $122.70 and ended the day at $94.25. And then to $93.26 following after hours trading.

LinkedIn was one of the hottest trending topics of the day, the blogosphere was a blur with new posts every few minutes and opinions were plentiful. The good news was dampened by worry that this was be the beginning of another dot.com bubble.

The Dice Rolls Again

Investment giant Warren Buffet doesn’t play in the speculation world because it’s not actual product and he is one of the wealthiest people on earth. While Mark Cuban, owner of the Dallas Mavericks, once owned broadcast.com. In 1999, the company was making about $14 Million in annual revenue and Yahoo bought it later that year for $5.6 Billion in stock options. The question remains whether LinkedIn is worth $95 bucks a share, $950 bucks a share or 95 cents a share. Perhaps the only safe bet is the velocity of purchases for stocks will slow down.

Speculators are frothing at their keyboards for the day Facebook or Twitter announce their IPOs which some estimates say it will happen in the next 12-18 months. The question on most critics’ minds is whether either will be properly valued. And judging by first day LinkedIn trading mayhem, that is doubtful.

IPOs almost ground to a hault after the collapse of Lehman Brothers and others in late 2008 in the U.S. and have never returned to the frenzy of the initial dot.com boom-bubble-bust. This volatility would okay if you could buy low, sell high and get out before the floor caves in. It's doubtful anyone will ever know the value of LinkedIn and with an 8,000% increase in 24-hours, the numbers are tough to trust. MySpace anyone?

Is this the beginning of a dot.boom or a dot.bust?

Kneale Mann
 
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