May 09, 2011
LinkedIn & the Social Network IPO Market
Posted by Christine Hurt

LinkedIn is set to issue shares in an initial public offering on May 19, and the share price sets a valuation on the social network company at $3 billion (share price range $32-35).  Nice.  LinkedIn is the first in a pipeline of new generation social media companies that everyone expects to go public:  Facebook, Groupon, Zynga, Twitter, etc.  Pandora is on its third amendment to its registration statement after filing in February 2011, but no IPO date has been set.  Skype is also on its third amendment after filing in August 2010, and no IPO date has been set.

The question that analysts keep asking harkens back to the 1999-2000 tech bubble:  Do the companies make a profit?  Yes, they are cool.  But shareholders need something more than cool after a month or two.  LinkedIn generates revenue through a premium service for subscribers and advertising.  It announced profits for 2010, but generated losses in 2009.  Is LinkedIn's IPO a sign of a bubble or just a sign that the IPO market is returning from a cold, cold slump?

As an aside, how many academics use LinkedIn?  I think I set up a profile over five years ago, but I'm more of a daily Facebook user.  Academics have such a fine line between personal and professional existences that Facebook seems to have filled that niche.  If I were practicing, I could see having a social network presence that was all business, though.  And, tells me that 5 of my FB friends are on its site, which posits itself as both the "LinkedIn for academics" and the "Facebook for academics."  Any aficionados?

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