LinkedIn IPO leads to future concerns

LinkedIn IPO leads to future concernsAfter the recent Initial Public Offering (IPO) of Silicon Valley job amalgamator LinkedIn, many industry analysts wonder if the company will be able to sustain its rapid growth and be profitable for shareholders.  Last Wednesday’s IPO saw stocks rise from $45 at the beginning of the day to $93 at the close of business, but it might be overvaluing the company. 94 million shares were sold, but another 30 million will be created for employee options and stock grants.  The company is said to be valued around $8.7 billion, about 35 times its 2010 revenue and about 550 times the value of its 2010 profits, leading to questions about sustainability.  By contrast, Google is valued at about 5 times its revenue and 20 times its 2010 profits.

LinkedIn has set a goal of being the main job search website in the world, linking employees and potential employers to each other.  It has already gained considerable footing in the US, with about 45 million subscribers. It could be noted, though, that this leaves little room for additional growth, as the majority of its target audience may have already signed up.  Expenses for the company are also expected to rise as they compete for top quality talent, so it seems premature to call the IPO a great success.  Only time will show if LinkedIn goes the way of so many 1990s tech firms.

 



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After the recent Initial Public Offering (IPO) of Silicon Valley job amalgamator LinkedIn, many industry analysts wonder if the company will be able to sustain its rapid growth and be profitable for shareholders.  Last Wednesday’s IPO saw stocks rise from $45 at the beginning of the day to $93 at the close of business, but it might be overvaluing the company. 94 million shares were sold, but another 30 million will be created for employee options and stock grants.  The company is said to be valued around $8.7 billion, about 35 times its 2010 revenue and about 550 times the...

LinkedIn IPO leads to future concernsAfter the recent Initial Public Offering (IPO) of Silicon Valley job amalgamator LinkedIn, many industry analysts wonder if the company will be able to sustain its rapid growth and be profitable for shareholders.  Last Wednesday’s IPO saw stocks rise from $45 at the beginning of the day to $93 at the close of business, but it might be overvaluing the company. 94 million shares were sold, but another 30 million will be created for employee options and stock grants.  The company is said to be valued around $8.7 billion, about 35 times its 2010 revenue and about 550 times the value of its 2010 profits, leading to questions about sustainability.  By contrast, Google is valued at about 5 times its revenue and 20 times its 2010 profits.

LinkedIn has set a goal of being the main job search website in the world, linking employees and potential employers to each other.  It has already gained considerable footing in the US, with about 45 million subscribers. It could be noted, though, that this leaves little room for additional growth, as the majority of its target audience may have already signed up.  Expenses for the company are also expected to rise as they compete for top quality talent, so it seems premature to call the IPO a great success.  Only time will show if LinkedIn goes the way of so many 1990s tech firms.

 



Support ASEAN news

Investvine has been a consistent voice in ASEAN news for more than a decade. From breaking news to exclusive interviews with key ASEAN leaders, we have brought you factual and engaging reports – the stories that matter, free of charge.

Like many news organisations, we are striving to survive in an age of reduced advertising and biased journalism. Our mission is to rise above today’s challenges and chart tomorrow’s world with clear, dependable reporting.

Support us now with a donation of your choosing. Your contribution will help us shine a light on important ASEAN stories, reach more people and lift the manifold voices of this dynamic, influential region.

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Donation Total: $10.00

 

 

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