Professional social networking site LinkedIn is set to go public on Thursday in one of the first IPOs of its kind. The business-focused website hopes to raise as much as $274 million.
LinkedIn said last week that it will price its IPO at between $32.00 and $35.00 per share, which would put the company's valuation at north of $3 billion if it successfully sells the 7.8 million shares that will be made available. The eight-year-old company was valued at $2.51 billion when it announced its intention to go public back in January. Trading on secondary markets reached as high as $31 as recently as March.
The IPO is especially significant because it marks the first of potentially several U.S.-based social networking websites to go public. Many analysts have speculated that sites like Facebook, Groupon and social gaming firm Zynga will launch an IPO at some point in the next year. The success of LinkedIn's IPO could act as a barometer for other similar offerings to follow.
LinkedIn will "guide others that are contemplating doing the same… as to price points,” Scott Sweet of IPO Boutique recently wrote in a note to clients, adding that the demand for the shares should be “extremely strong," according to Market Watch.
Tom Taulli, author of "All About Short Selling" and "Investing in IPOs," disagreed, telling the Wall Street Journal that LinkedIn doesn't carry the same "pizzazz" as other players in the social networking space.
"This won't give us the best indication how crazy people might go over some these other deals," he told the paper.
LinkedIn is coming off of a strong 2010 where it generated net revenues $243 million, double that of the previous year. The company also posted a net income of $15.4 million. LinkedIn lost $4 million in 2009.
The IPO is expected to launch on the New York Stock Exchange under the ticker “LNKD."
Beecher Tuttle is a TechZone360 contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.
Edited by Carrie Schmelkin
