14 DAY TRIAL // LinkedIn, the professional social network is finally going public, later today. It's the first social networking IPO, the first big Web 2.0 IPO and the first of a string of very hot initial offers coming, Zynga, Groupon and, of course, Facebook.
LinkedIn shares will be traded on the New York Stock Exchange under the ticker LNKD. Share prices will be a hefty $45 a piece, giving LinkedIn a valuation of about $4.3 billion, quite a large figure.
Interestingly enough, LinkedIn just hiked the price of its shares, it was initially going to go public at $32 to $35 per share.
Even that figure was considered big by some analysts. But the bankers involved thought they could go higher and raised the price a week ago.
Considering the amount of revenue and especially the net margins of the company, the price is hardly justified.
LinkedIn made just $243 million revenue in 2010 about 20 times less than what it expects to be worth once the IPO is said and done, just six percent of which was income. The company wants to raise about $274 million by selling 4,827,804 shares.
LinkedIn investors are selling an additional 3,012,196 class A shares. Class A shares are worth just as much as class B ones, but only get 1 vote as opposed to ten. The company says class B shares make up 99.1 percent of the votes.
LinkedIn founder and former CEO Reid Hoffman is the company's biggest single investors and will keep a 21.7% voting stake in the company. His share of LinkedIn is worth $858 million at the company's floated valuation.
Many are arguing that LinkedIn is in no way worth that much. Of course, considering that Twitter is valued at about the same figure, Facebook is valued in excess of $70 billion in some transactions and that Skype was just sold for $8.5 billion, LinkedIn's valuation pales in comparison.
And, since regular investors, can't get their hands on Twitter or Facebook, they'll look to LinkedIn to satisfy their social networking investing needs.