
LinkedIn Prices IPO At $45 Per Share, High End Of Range - ssclafani
http://techcrunch.com/2011/05/18/professional-social-network-linkedin-prices-ipo-at-45-per-share-high-end-of-range/
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schmittz
This is going to be incredibly interesting to see what happens starting
tomorrow for the remainder of the trading week. From a business perspective,
this company is hardly worth its 4.5$ billion valuation. However, I have a
theory that we're starting to see companies that are valued based on
unquantifiable social utility as opposed to just hard economics. Although,
this could just be "the bubble" finally forming...

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prpon
With 2 million in income for the last quarter unless LinkedIn has something up
their sleeve, 4.5 billion is a little too much. About having something up
their sleeve, I haven't seen any innovation from them in the past 4 years or
so.

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rhizome
Anybody know what Pets.com's revenue multiple was?

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rdl
Ultimately, earnings > revenue. However:

For a business like Pets.com (or Amazon, etc....), earnings is what I'd worry
about (EBITDA, maybe, but probably just straight earnings). It's easy to sell
$20 pet food for $10 and throw in free shipping and get a lot of customers.
It's hard to sell $20 pet food for $10 and actually make money doing so.

LinkedIn (Facebook, Zynga, ...) is the kind of business where the most
relevant metrics are userbase, engagement, and revenue; it's pretty low per
user marginal cost (nil?), and thus scaling userbase, engagement, and getting
people to pay something will feed directly into earnings; it's easier to track
the sources independently vs. the sink.

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rhizome
sure, but when the rubber hits the road, pricing the IPO is hard line in the
sand that crap like EBITDA can't match. As a user, I don't think LinkedIn is
ready for IPO, qualitywise, but that's the way the machine works. in other
words, only one of your examples is priced for IPO, what other companies fit
their equation? :) I was wondering how far they were from Pets.com (as an
extreme example), numberswise.

