Shares surge, valuing company at roughly $8.9 billion
Shares of LinkedIn Corp. more than doubled Thursday in a strong public-trading debut, highlighting investors’ pent-up demand for ownership in a new class of social-networking companies.
LinkedIn’s stock soared at one point more than 140% to $108.25, before receding to $94.25 by the close of its first day of trading on the New York Stock Exchange.
Propelled by vigorous demand leading up to its initial public offering, LinkedIn’s IPO priced at $45 a share, at the top end of a recently raised range of $42 to $45 a share. Previously, the IPO pricing range had been $32 to $35 for shares in the professional-networking service.
Mountain View, Calif.–based LinkedIn is seen as the first in a wave of Internet IPOs, which could include Facebook Inc., Groupon Inc. and Zynga Inc.
LinkedIn is geared to professionals, and draws a big chunk of its revenue from services offered to businesses. LinkedIn said last year it had nearly 3,900 companies using its “hiring solutions” service for recruiting.
LinkedIn announced in March that it reached 100 million members, with more than half of its members based outside the United States. The company said it was seeing its fastest growth in Brazil, Mexico, India and France.
Members listed a range of occupations from teacher and chocolatier to Elvis Presley impersonator.
LinkedIn’s IPO share gain of more than 100% from its initial price “was a fairly common occurrence in the dot-com years of 1999 and 2000,” according to Renaissance Capital.
Founder of LinkedIn Reid Garrett Hoffman (center) applauds with CEO Jeffrey Weiner (right) at the NYSE.
A few IPOs have “hit that mark” in the post-bubble era, “including Baidu.com, Youku.com and Qihoo 360 Technology , Greenwich, Conn.-based Renaissance said. “LinkedIn may be joining the list after its close today,” it added.
Scott Sweet, senior managing partner at IPO Boutique, said LinkedIn’s blockbuster IPO will be very encouraging to companies widely expected to go public soon, such as Groupon and Zynga.
“This was to be used as a proxy for price point,” Sweet said of LinkedIn. “With it pricing at $45 and trading at $80-plus, it now seems logical that Groupon, Twitter and Zynga should and likely will file shortly in that they were very anxiously awaiting this debut.”
The main focus remains on Facebook, which has more than 600 million members, now seen as the dominant social-networking site.
“Facebook, as I have said in the past, will be pandemonium when it files,” Sweet remarked. “Facebook is so far and away the leader in this area, and nobody can catch them now.”