LinkedIn IPO Price Bump Has the Valley Crying “Bubble”
Going public is a great business strategy for many companies, and IPOs have become especially attractive to Silicon Valley companies. LinkedIn is among the many that have made public their IPO goals in recent months, but a significant increase in LinkedIn’s expected IPO price, zooming $10 a share higher than first anticipated, has the whole of the Valley crying “bubble.”
Rightly so. The price of LinkedIn’s price per share, initially set between $32 and $35, has soared to $42 to $45, giving the social network a valuation exceeding $4 billion. As the Wall Street Journal points out, we haven’t seen a price bump like this in over a decade. And you know what happened back in 2000–the bubble went “pop!”
The Journal goes on to outline some of the high IPO prices that inflated the bubble to the point of disaster, spanning Palm’s 107% increase, Selectica’s 140% increase, and ArrowPoint Communications 93.8% increase, which took place a day before the Nasdaq peaked. ArrowPoint came out relatively unscathed, having been picked up by Cisco for approximately $6 billion, at $143 per share.
For some, LinkedIn’s high IPO price calls for justification. Originally filing for its IPO in late January, LinkedIn first planned to raise about $175 million. Upping the ante earlier this month, LinkedIn’s been creeping its prices upwards. Putting LinkedIn in at the same round table as Google, which had one of the most significant IPO’s in the days of the internet, really puts the social enterprise front and center. It’s been a close watch for investors these past few months, among the global players that have the potential to reign in a great deal of capital and marketing power in the coming years. But such a price bump makes everyone wonder what its IPO plans will do to the rest of the market.
LinkedIn isn’t the only one going after an IPO. Facebook, rumored to jump the gun early, along with Groupon, Twitter and Zynga, are all headed in the IPO direction. The “Big 5” have garnered a great deal of attention for their plans to go public, but more importantly for their claims at driving the economy of the future.
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