Shares rise as much as 171% intraday on debut at the New York Stock Exchange before closing at $94.25, more than 109 percent above the IPO price. The company is worth nearly $9 billion after the first day of trading. A LinkedIn employee celebrating in the parking lot of the company’s headquarters in Mountain View, Calif.:
I got here at 6 a.m. We’ve been celebrating since then. We recognize that there’s potentially a bubble right now.
The underwriters price the deal at $45 a share, near the top of the range, giving a valuation of $4.25 for 7.84 million shares—the biggest U.S. Internet IPO since Google. Bessemer sells into the IPO, and Cowan and Levine exit and leave the board.
Analysts are divided with the bearish view being that the valuation is high and references to things like ‘key metrics’ of website visits and page views are reminiscent of Dotcom hype. The bullish view is that the company is supported by three diversified revenue streams – ads, premium content, and hiring tools sold to recruiters. It is also the only social media stock that is publicly available, justifying a premium on the shares.
Goldman Sachs, The McGraw-Hill Companies, and SAP Ventures join the fifth round, with Bessemer the only existing investor to follow-on from the previous rounds. They provide a total of $22.7 million. Bessemer managing partner Cowan:
In today’s economy we spend more time tending to our professional networks, and so it’s no surprise that LinkedIn continues to grow in membership and engagement.
Bessemer joins Bain Capital and existing investors Sequoia Capital and Greylock Partners to supply $53 million in the fourth funding round, in exchange for a 5% stake. Nye:
We have a strong balance sheet and a strong business model. Now we have the luxury of being able to focus on building a great company.