LinkedIN's IPO success heralds social media surge
LinkedIn, the business-oriented social networking site, raised several thousand eyebrows this month, when it listed itself on the stock market. Its decision to list on the New York Stock Exchange rather than the NASDAQ (which is more traditional for tech companies) wasn't the most surprising aspect of its Initial Public Offering. Rather, the price was. Originally, LinkedIn valued itself around $3 billion, but subsequently bumped up its initial pricing to reflect a $4 billion value offering which is around 17 times its 2010 revenunes.
This obviously proved to be the right thing to do. A day after the listing, the market value of the company rocketed to more than $8 billion, almost doubling the initial listing price.
This fervour over LinkedIn shows just how hot the market is for social media. LinkedIn is nine years old, and has gradually grown its user base, particularly in the last couple of years, as the service has hit critical mass. Its value differs slightly to Facebook's, in that, while it has fewer members, they are more neatly categorized. Whereas Facebook is a broad social networking service for anyone who chooses to participate, LinkedIn focuses on its users' business personas. Teenagers who are still at school are not really the target market for this social network. So, instead of a marketing service for consumer products and services (which is something on which Facebook intends to capitalize), LinkedIn is more focused on professionals wanting to connect with others. Recruiters, for example, find this service particularly useful.
LinkedIn represents the first in what promises to be a long line of social networking companies that come to market as the economy rebounds. It has set the bar, with what is possibly the biggest US Internet company flotation since Google's 2004 debut.