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LinkedIn IPO Pricing Is Not Logical

05/17/2011

Social media site LinkedIn is scheduled to offer shares of the company’s stock this Thursday. Shares are priced at $32 – $35. This will put LinkedIn with a valuation of around $3.3 billion. That was yesterday.

There is so much demand for the stock the company has boosted its IPO price by 30%, to $4.1 billion. The shares will now be priced at $42 – $45 apiece.

As the first social media business to go public there’s much enthusiasm around its IPO. But with Facebook, Twitter and Etsy looking to go public – LinkedIn could face investor challenges in the months to come. For the record I believe Facebook has a stronger business model than LinkedIn.

The overnight increase in valuation are fitting for a social media company. As it stands today – virtually everything about social media is an experiment. Apparently so is investing in social media.


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