LinkedIn's stock up 90 percent in market debut

Jeff Weiner, second from right, LinkedIn's CEO, celebrates the company's listing, Thursday, May 19, 2011 at the New York Stock Exchange. LinkedIn, based in Mountain View, Calif., is an internet-based social networking rolodex for business people. (AP Photo/Mark Lennihan)
May 19, 2011 6:56:41 PM PDT
Mark this day down in history. Silicon Valley is once again producing instant, overnight multi-millionaires. LinkedIn went public Thursday, and its stock shot up from an initial price of $45 per share to an intraday high of $120. It closed the trading day at $94, a gain of 109.44 percent. That means LinkedIn is now an $8 billion company. CEO Jeffrey Weiner's stake in the company was about $200 million yesterday with the initial public offering, and that amount has more than doubled overnight with the first day of trading.

The Mountain View company's stock market debut is the most successful one since Google went public seven years ago. LinkedIn operates a specialized social network that allows business and professional people to connect and network with others. It has nearly 1,300 employees. They celebrated today with smoothies and Krispy Kreme doughnuts.

Is it the start of another boom cycle, or could it just lead to another bubble burst? The jury's still out on that, according to venture capitalists and hopeful start-up founders. It also puts pressure on social network rivals Facebook and Twitter, both based in the Bay Area, to decide when the right time might be for them to go public.

"For great companies this is a great time to be looking for money, and it's not only institutional money, it's the public," said NOR1 chairman and CEO Art Norins. "And when those two entities are aligned, good things happen."

LinkedIn's successful IPO will raise all boats, says Seymour Duncker, founder and CEO of a start-up called iCharts, based at the Plug and Play Tech Center, a start-up incubator in Sunnyvale. iCharts is not in the social networking business, but Duncker says it shows that a successful venture such as LinkedIn will attract investment dollars.

"These are very valuable companies. They're making cash. They've got strong business models," said Wadja.com CEO Alex Christoforou. "So I think we're at a stage now where I guess social media is maturing."

Kevin Fong, a veteran venture capitalist with GSR Ventures in Palo Alto, said the difference here is that LinkedIn has a solid base of 100 million users and has proved to be a useful networking platform for professionals. By contrast, Google has about 600 million users.

"It'll raise all boats because it'll bring more attention to the tech sector again," said Fong. "There's a lot of great companies that have been hidden for a long time in the valley that are actually doing quite well in the traditional areas of Silicon Valley success."

Fong was involved in last year's acquisition of 3PAR by HP after a spirited bidding war with Dell. Earlier, Fong worked for VC firms Mayfield and Goldman Sachs.

LinkedIn made $15.4 million in profits last year, but it is not expected to be profitable this year as it invests in product and technology development.

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