Investors snap up top price shares in LinkedIn
The social-networking bubble shows no sign of bursting, after shares in LinkedIn hit premium prices on its stock market debut.
In its initial public offering, LinkedIn sold 7.84 million shares for $45 each, for a total of $352.8 million, as investors eyed potential for the professional networking site to link companies with customers and job seekers.
Earlier this week, the company had raised the expected price range of its IPO by 30% to $42 to $45 per share, from $32 to $35, due to high demand.
The strong demand for the offering bodes well for other prominent social-networking companies expected to go public in the coming months and years, including Facebook, Groupon, Twitter and Zynga.
While the companies have significantly different business models, they each tap social networks and the valuations for each are skyrocketing.
Linked in was valued at $4.25 billion, while Facebook, which is expected to go public in April 2012, was valued at $70 billion in recent sales of the company’s private shares, up from $50 billion at the beginning of the year.
“There is a feeding frenzy going on,” said Ben Howe, chief executive of boutique investment bank America’s Growth Capital.
Yet to proponents of the value of connecting people online, the high market valuations of these companies may make sense. According to investors, tapping into the social network of a customer is the most efficient way for a company to find new customers.
“I think there’s a lot of manifest destiny involved,” he said. “I think people are looking at the future prospects.”