In Champagne, there are lots of bubbles. The leaders of the social network LinkedIn for professionals have had to drink a lot yesterday, noting the dramatic increase in group action at its first trading day. But have they asked if the drink was not too strong an aftertaste of Internet bubble?
At first blush, LinkedIn has indeed something to celebrate. The California company has filled the pockets during its IPO. She succeeded on Thursday, raising $ 352 million by selling nearly 8 million shares at 45 dollars each.The group noted the purchase price the day before his arrival on the market, raising it from 32 to 45 dollars.
When quotations on Wall Street have begun, the transactions are packed. The action of LinkedIn jumped in one day by 109%. The Bourse closed with action LinkedIn to $ 98, after passing a time, the symbolic $ 100. After this crazy day, LinkedIn has a market value of $ 8.9 billion - more than 570 times its revenue in 2010.
An economic model different from Facebook
Everyone seemed to want to acquire this Thursday from the IPO, the largest for a U.S. company web since Google in 2004.LinkedIn, born in 2003, has about 100 million users. This social network is unique in that go mainly to professionals draws about half its income from the investment of vacancies.
A special feature compared to the giant Facebook which all - or almost - the money comes from advertising.LinkedIn's business model would be attractive to investors who bet on economic recovery, and its accompanying ads: more and more people will seek to recruit on the site.
LinkedIn's market performance was described by analysts as "surprising" by the New York Times or "tulip mania" in the Wall Street Journal (in reference to the explosion in the price of tulips in the Netherlands in the seventeenth century that was followed by a dramatic collapse in the value of these flowers).The newspaper said that U.S. economic LinkedIn has only 15 million dollars in profits last year.
Inflation dangerous?
This market success may indeed have a bitter taste for LinkedIn and all players in the Internet sector. The leaders of the social network may wonder if they have not been fooled by the banks - like Bank of America and Morgan Stanley - who advised them to price their work at 45 dollars and took charge of selling at this rate. Because these institutions were then forced to sell their clients the same shares at prices much higher."It is as if a real estate agent found a buyer for your home $ 1 million, and the next day allowed the new owner to sell $ 2 million," says Friday, Silicon Valley Insider, a site specialized in new technologies.
The other concern relates to the entire Internet sector. "The specter of a new bubble is more present than ever," notes the Economist in a blog post. The evolution of LinkedIn on the secondary market - where the shares traded companies before their IPO - good example of this price inflation: there is another year, it was possible to buy a stake in the social network professional for less than $ 20.Given the success of the first IPO, the value of similar businesses in the secondary market could explode. However, these companies do not generally publish information about their financial situation before their IPO.
