LINKEDIN sold $352.8m (£218.2bn) worth of shares to the public yesterday, with intense demand for the stock a sign of renewed frenzy for online and social networking companies.
LinkedIn, which allows people to create professional profiles and is widely used as a job-hunting tool, floated at $45 a share, the top end of a range that was already revised upward earlier in the week.
At the IPO price the company has a market value of $4.25bn. Its shares are expected to begin trading on the New York Stock Exchange today under the symbol “LNKD”.
LinkedIn is the first US social networking company to become public, with a handful of others expected to follow suit, including Facebook, Groupon, Twitter and Zynga.
Groupon, which brings people together for deals, has also had talks with bankers about an public offering that could value it at $15 to $20bn.
“Social networking is the most efficient customer acquisition strategy in the world,” said Saad Khan, a partner at venture capital firm CMEA Capital.
But some industry players were sceptical about the float, pointing out that LinkedIn has admitted that it will not turn a profit under the generally accepted accounting principles (GAAP) basis.
“Frankly, they’re a little bit arrogant saying, ‘We’re going to have a great IPO, but we’re also going to lose money this year,’” said Francis Gaskins, IPOdesktop.com president.
LinkedIn is an online platform but actually makes more money through so-called “field sales”, or a sales force directly soliciting customers, agencies and resellers.
In 2010, 56 per cent of LinkedIn’s net revenue came from field sales. By way of comparison, only 44 per cent of LinkedIn’s net revenue came from online sales.
City A.M. Reporter