No, that's not how it works.
LinkedIn priced their IPO at $45/share, meaning they raised $352.8 million. The share price right now has no impact on how much money they raised.
"By underpricing the stock, Morgan and BOFA gave their best institutional clients a gift of at least $175 million"
http://blogs.forbes.com/greatspeculations/2011/05/19/linkedi...
If LinkedIn wants to capture some of the value from the multiple they're seeing today, they can simply sell (or issue) more stock. Doubling or tripling your IPO price is not a tragedy by anyone's standards.
Why does the price 90 days from now matter to the judgement of whether or not the initial sale - today's sale only - was a success? If the price drops below the initial sale value, then $45 today will definitely seem expensive to people buying it 90 days from now. But I don't see where it would mean that the company made a mistake in the initial offer of $45/share - in fact, wouldn't it look like the company got a good deal, in selling the initial shares at above-market-values (in 90 days from now)?
Forget all the junk you think you know about markets. A stock is something you buy. How many things have you bought that doubled in resale price the day you bought it? I'll bet it's a vanishingly small number.
From a producers point of view such a situation means you underestimated demand for your product, which means you didn't do enough research.
In line with the common stupidity of IPOs, LinkedIn trusted a conflicted party to do that research for it.
LinkedIn paid a fear tax. Fear that if they tried to buck the statu-quo like Google they wouldn't come out as well, fear that if they tried something shockingly new like selling stocks directly to individuals who want them they would fail.*
I don't mind when people note the standard way things are done, but for the love of Bob don't pretend the way the stock market works today is fundamental, immutable, or even close to Good.
* Speed argument on this point: Illegal! -> Benefits from that? -> Ignorant investors protected! -> Uh huh, other externalities? -> Large investors make millions! -> We're done here.
Year; Revenue; Costs; Income 2008; 78,773; 84,282; (4,522) 2009; 120,127; 123,482; (3,973) 2010; 243,099; 223,523; 15,385
expense growth is 46%, 82% yoy. revenue growth is 52%, 103% yoy.
So, you have a company that is growing revenue faster than expenses, has 100% year over year revenue growth, and has just hit the inflection point to be profitable... and you want to place a market average P/E on it?
But... I will say that I would be encouraged if I were a shareholder by this:
'The company' chief executive officer, Jeffrey Weiner, said in an interview that he wasn't placing much importance on how his company's stock performed on its first day. Mr. Weiner's stake in the company is now worth more than $200 million.
"To be honest with you, I didn't give a lot of thought to what the opening would be like," Mr. Weiner said. "This isn't necessarily indicative of anything. The market will do what it will do. What we are completely focused on is our long-term plans and our fundamentals, and getting that right."'
(http://online.wsj.com/article/SB1000142405274870481660457633...)
Why else would a CEO say anything different? I've been through an IPO and basically heard the same thing from the CEO.
If LinkedIn can make $243M/year selling to recruiters and job seekers in a recession, what do you think happens when we have a global recovery and the inevitable hiring boom comes?
People are going to be 'networking' most intensely when they don't have a job or are worried about their current job. If there are fewer people looking for a job and those people get pulled out of the market more quickly, there's less money to be made from them.
LinkedIn earned their 100 million users by providing a professional networking platform where the users could choose who they network with. When the userbase has less of a choice regarding who contacts them, they'll abandon linkedIn as fast as a teenager terminating his MySpace account.
LinkedIn is incredibly successful in IT related markets, mostly in the US.
It's like when Amazon started, it was very successful selling to people involved with the internet in some professional capacity.
With LNKD you should be looking at revenue, competition and market penetration (rev is doubling yoy, three sources, 4500 business customers paying avg. $23k a year, 75% of fortune 100, 60% USA - which means they have a lot of growing to do). they are spending everything that comes in on product development, sales and marketing and R&D - it is all growth phase. $400M revenue this year.
To add - LinkedIn isn't really a 'social' company either since its revenue is not based on ads. They are in the recruitment market, where companies are known to pay tens of thousands of dollars for recruitment leads. And in that regard, they still aren't even exploiting their position as much as they could be (which means they have a lot of room to grow both out and up)
If they wanted to impress skeptics they could cut back all sales and marketing and development and just bank the 450M and pay out a dividend, in which case it would be a market cap of ~$4B, and a lot more love in comment threads on the internet :)
Welcome to the rigged game.
LinkedIn is clearly focused on long term gains over short term profits.
A valuation of 6.5 billion dollars on $15 million net income. Let that sink in.