14 DAY TRIAL // The first of a string of highly anticipated tech company IPOs was a huge success, judging by the first day of trading. Shares of LinkedIn, which started trading yesterday on the New York Stock Exchange, surged from their initial price of $45, which plenty were saying was too high, to as much as $122 and settled at around $94 at the closing bell.
Shares were listed at $45 initially, but opened at $83. The relatively small number of shares being offered, a small slice of the company, along with the lack of any other major Web 2.0 IPO and the surge in the valuations of tech companies and social networks in particular, led to a huge amount of interest and activity.
With shares trading at $93.86 after the first day, LinkedIn is worth $8.9 billion. It's the biggest internet company IPO since Google in 2004, so the demand is understandable.
LinkedIn raised $352.8 million in the IPO, more than it made in revenue last year. Based on the fact that the company is still making very little and earned only about $15 million in 2010, a lot of people don't trust the sky-high valuation.
Still, the market loved the IPO. It's only the first day, things may change in time, but it does set the stage for upcoming IPOs from companies such as Facebook, Zynga, Groupon and so on.
The LinkedIn IPO also made quite a lot of people significantly richer. Founder and former CEO Reid Hoffman is the biggest shareholder and his slice is now worth about $1.8 billion. He only sold less than one percent of his shares.
The venture capital firm Sequoia Capital, which hasn't sold any shares, has a $1.59 billion stake in LinkedIn. Another investor Greylock Partners owns a $1.32 billion stake. Interestingly enough, Hoffman is a partner at Greylock.