A lot of noise made about LinkedIn's IPO valuation in the run-up to today. An exciting day by all accounts as LinkedIn is the first of the American social media companies to IPO. Huge demand caused shares to open almost 85% over the offer price.
Someone on StockTwits was pointing out yesterday that Monster MWW could be seen as a much better value.
@lamonicbuzz If LNKD prices at $45, its market cap would be $4.25B. That's 2.3 times market value of $MWW. But MWW sales neraly 4X as large last year.
My response is that Monster is the past, LinkedIn is the future. What LI does so well is provide a rich, context-added repository of job candidates and excellent tools for recruiters to find the right candidates.
What works so well about LI is the fact that it's perfectly acceptable to have your profile active on there while you have a job you're perfectly happy with. This is the equivalent of having a free OkCupid profile - why not? If you're not looking for anything, your LI profile can just sit there, attracting attention from time to time.
Or if you're serious, you might opt to pay LI for certain premium features like seeing exactly who's been looking at your profile.
How does the LI profile set apart from profiles on other sites? Well, it's the interconnectedness of it. It's like if you friend someone on Facebook, you already know them through some mutual friend, and you can see right off the bat that they have 100 some friends and are thus a perfectly normal person.
With LI you have your connections and then there's 'recommendations'. These really give people looking at your profile invaluable context, like getting job references but packaged and sound-bite-sized.
In the IPO game, typical methods of determining valuation go out the window. I know for 100% sure that I will not be catching the best price by buying today. But I feel good that through the remainder of the year the trajectory will be up. I don't think this will be anything like RENN for instance, as Americans know plenty about LNKD.
It seems this IPO will be the bellweather for the social media IPOs to come (Twitter being the elephant in that room). And how could social media fail to draw buyers? When that Facebook movie came out last September, Facebook was worth only $25B. It's now worth potentially $70B. People know this and they want in. This will be one of those stocks people feel they have to pick up some of for their IRA.