LinkedIn Prices IPO At $45 Per Share, High End Of Range

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8 points·ssclafani··5 comments

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...

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.

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

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.

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.

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