May 20th, 2011
01:23 AM GMT
New York (CNN) – There was a lot of cheering in the New York offices of LinkedIn – with good reason. On its first day of trading shares of the social networking site for professionals soared over 100%. That kind of price action raises a lot of questions.
Can the company like up to the hype? Do people only use Linkedin when they are looking for a job? Did they leave too much money on the table by not pricing the IPO higher?
I put some of these concerns to Jeff Weiner the CEO. He wouldn’t address the valuation directly but he did tell me they were very focused on finding investors who were focused on the long-term. It was his primary concern in this IPO. Weiner is very clear that he and his team are planning on plowing most of their profits back into the company. They may not even be profitable next year.
As CNNMoney reports, LinkedIn priced its initial public offering at $45 a share late Wednesday - the high end of its range.
That share price values LinkedIn at $4.25 billion - and would net the company more than $350 million, making it one of the largest tech IPOs since Google in 2004.
After a successful first day of trading, maybe their bankers got it wrong and perhaps the company could have scored a much bigger cash net with this IPO. But if the institutions who committed at $45 dollar a share are the kind of investors that will be comfortable holding it for a very long time – -even if the company doesn’t make money - maybe it wasn’t mistake or missed opportunity. Who wants to see a headline in six months that reads, “LinkedIn trading below its IPO price”? It is risky, but I got the sense it was intentional.
As for LinkedIn’s future, Weiner said the site is much more than just a job center. Some of their fastest growth is coming from emerging markets such as Brazil, China and India. They are aggressively adding more languages and yes - they are hiring. As fast as they can!
Are you on LinkedIn? How do you find it compared to Facebook?
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