LinkedIn will become the first social media site to go public on Thursday, May 19th. The social media business networker stands to raise close to $300 million with its high-profile IPO. Company value could exceed 3 billion once trading begins.
The company will trade on the NYSE with the symbol LNKD. LinkedIn is eight years old and now has over 100 million members. They also became profitable last year.
Many potential investors may wonder if the opening day price is a safe bet since shares of LNKD have already bid over 40 dollars.
With revenues projected to close in on the half-billion mark next year and income from subscriptions and advertising increasing rapidly, the first day share price may actually be a good investment.
After all, LNKD will be the first of its kind to market. Also a few years ago, investors could get shares of Google for 75 dollars on their first day of trading. They now trade for well over 500 dollars per share.
There is a real possibility that day one IPO investors could end up doubling their money. Though a lot depends on the overall market, which if it experiences a significant downturn, IPO’s will suffer.
Also, if LNKD prices at the high-end, smart investors may want to wait until a few days after the IPO, since many pre-IPO insiders often unload shares which would bring down the price.
Other risks involve around the fact that LNDK shares will trade at about 18 times next year’s earnings compared to Google, which currently trades at about six times.
Another positive aspect of LinkedIn is that unlike a pure online company, at least half of its revenue comes from field sales. Therefore, it has the advantage of being a “brick and mortar” company as well as an online business networking website.
Therefore, as is the case with Google, LNKD isn’t going anywhere and getting shares early may just Link you In to some nice returns.