IPOs Gone Wild: LinkedIn Soars 170 Percent on First Day of Trading

Paul Lilly

LinkedIn started trading today at the New York Stock Exchange (NYSE) under the symbol LNKD following a recent IPO filing, and as most guessed would happen, the stock price shot up like a bottle of Coca-Cola laced with Mentos . LinkedIn priced its IPO at $45, it opened at $83, and hit $120 within two hours of trading before reaching a high of $122.70. This marks the biggest IPO since Google, the Huffington Post says, leaving analysts to debate if things are out of control, or if this is simply the beginning.

The big winners here are the Venture Capitalists whose combined stake is more than $7 billion. According to Bloomberg , LinkedIn was valued at $15 million back in 2003. At the time, LinkedIn had 14 employees and 78,000 users. Today LinkedInk has 990 employees, 90 million users, and a revenue stream of $243 million (in 2010).

There's another side to this story. Business Insider contends that LinkedIn's underwriters "just screwed the company and its shareholders" out of millions of dollars "by wildly underpricing the deal and selling LinkedIn's stock to institutional clients way too cheaply." The way Business Insider figures it, Morgan Stanley and Bank of America gift wrapped no less than $175 million this morning to its clients.

There are lessons to be learned all around on this one. LinkedIn is one of the first social networking sites to go public, but it surely won't be the last.

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