By: Aseem Gaurav on May 20, 2011
The listing of LinkedIn (LNKD), is likely to reawaken the investors’ interest in the Internet's latest buzzword: social networking. Its shares more than doubled to $94.25 on the first day of trading on the New York Stock Exchange. This is one of the most impressive debuts on the Wall Street of any Internet company after Google.
The company’s listing also became a lucrative deal especially for founder Reid Hoffman, who is now worth $2 billion more based on LinkedIn’s market cap of $10 billion. Hoffman, the serial entrepreneur and Oxford philosophy graduate, conceived LinkedIn in his living room in 2002.
By captivating analysts from Wall Street to Silicon Valley, LinkedIn's performance is being viewed as a stage-setter for other social-media IPOs to come.
Analysts say LinkedIn’s mega listing means a lot for other social networking giants like Twitter and Facebook and this type of valuation may persuade many others to take advantage of the momentum.
“The IPO market is a momentum market. LinkedIn should have positive impact on tech equity market,” said an analyst.
LinkedIn has more than 100 million members and is strictly professional, with job-hunters, hiring managers and their colleagues making business connections. The business model of the company makes money by charging businesses fees to recruit and advertise.
The company plans to use the proceeds from the IPO to beef up operations and possibly to buy other companies.
