Analysts Wary of LinkedIn’s Stock Surge | Hacker News Reader

Analysts Wary of LinkedIn’s Stock Surge

nytimes.com

27 pointsgarbowza23 comments

Best part of the story:

"Price-to-earnings comparisons for other hot Internet companies, like TheGlobe.com or even Netscape on their opening days, are difficult as they did not have any earnings."

To those who are thinking about shorting it when that becomes available:

If you buy LinkedIn at $100, the most you can lose is $100. But if you short at $100, your loss can be infinite.

As a short seller, you could run out of money before the promoter(s) runs out of ideas.

Being short a stock, while seeing some promoter taking the stock up would be quite agonizing.

You may be right about it being overpriced, but that's not enough. When it comes to shorting, it's the timing that you have to get right. And that's really hard.

It's okay to just sit this out.

put another way ...

The market can stay irrational longer than you can stay solvent. - John Maynard Keynes

If you're long LinkedIn at $100, the most you can lose is $100. But if you short at $100, your loss can be infinite.

This is what put options are for.

That's true.

But IMO, to make it worthwhile, you still have to get the timing right. That's the hard part.

Identifying a bubble is relatively easy. What you don't know is how big it'll get and when it'll pop.

Definitely a ripe spot for put options... but there are no public put/call options available for LNKD yet, as far as I know. It's impossible to price an option without having some history of the underlying security's volatility--and we have zero history for LNKD.

The spread would have to be gigantic to lure market makers into such a trade--and, rightly so, investors aren't interested in gigantic spreads.

If you want to get bearish on this you'll have to strap on your helmet and just short it.

Just buy a put with a strike at $100. Accomplishes effectively the same thing as the short, but limits your downside.

It's true. I mused publicly about shorting it in a previous thread, but you're right, the timing with shorts is tricky. Also, shorting a company that seems likely to eventually catch up with its stock price, even if that takes longer than its current stockholders expect, leaves one with a relatively limited profit expectation. Long-term shorting is best done on stocks that have a visible shot at going to zero.

Another way to "short" is to buy put options. The most you can lose is the price of the option. Are there any puts for Linked In? I'd buy those... maybe.

LinkedIn was smart to go public before Facebook.

However, $8B for what essentially amounts to a glorified harassment tool for recruiters is a bit ludicrous.

I'm not going to say the valuation is right or wrong... but LinkedIn is very valuable for me: No more carrying around business cards I get from other people and I can easily keep in touch with people in other companies in my industry and see who's hiring/changing positions.

I consider Facebook the new AT&T and LinkedIn the new Rolodex.

LinkedIn could be turned into the world's best job board. But it is currently built like an old-fashioned dating site. It's like Match.com for jobs.

$15 million profit, $8 billion valuation

LOL

Yep, Bubble 2.0 is upon us. I just hope people can put two and two together this time and get out before it bursts.

You are like these crazies announcing the end of the world. Yes, it will happen eventually, but if you don't know when, you're not adding anything to the debate by stating the obvious.

The end of the world and a bubble are two entirely different things. I can also argue that your statement didn't add anything either without stating the obvious.

"Linkedin IPO: net revenue $100M, market cap $4B. Google IPO: net revenue $800M, market cap $24B." http://twitter.com/akkartik/status/72519743835348992

Seems pretty reasonable.

What about profits?

To know whether it's reasonable, you need to know not only the amount of revenue but also the revenue growth rate. I don't have the numbers in front of me, but my impression is that LinkedIn's revenue growth, while substantial, is not in the stratospheric territory that Google's was.

(There's profit to consider too, of course, but the business models of these two companies are similar enough that one would expect them to have similar margins.)

Turns out linkedin doubled revenue YoY. http://techcrunch.com/2011/01/27/linkedin-files-for-ipo

Google (gross revenue) was at 3x. http://www.sec.gov/Archives/edgar/data/1288776/0001193125041...

All this is details. It's pretty clear that prices aren't crazily inflated.

LinkedIn were played here. That valuation was insane they reminded me of those tech companies like Excite who went down the drain. On the other hand Facebook's strategy was really conservative and wise for not going public yet.

Facebook can raise a billion dollars over lunch at this point.

Apart from the onerous reporting requirements once you go north of 500 shareholders, I don't see why they would bother to go public unless a very large shareholder started pushing for it. And even then it seems possible to unload multi-centimillion chunks in private exchanges.

I'm sure all their large investors are pushing for it. Given the, uh, irrational exuberance we're seeing, they may well get more for their stake in a very liquid market, and it probably easier to buy or sell in public rather than on the secondary market.

Reply on news.ycombinator.com