Last week, professional social networking site, LinkedIn (LNKD), launched it’s IPO, while surging over 100% within it’s first day. This put the value of the company, which made $15 million in profit last year, at more than $8 billion.
Now I’ll be the first to admit that I never believed in the valuation of the social networking/new age web services. It is pretty clear to me that in this sector it is more about how many eyeballs you have, while worrying about how to make a profit later… just look at Twitter. Sort of reminds me buying overpriced homes on credit. That worked out well.
Along side LinkedIn, you have sites like Groupon turning billions of dollars in buyout figures, while Facebook is valued in the 10′s of billions. In the world of market analysis and crunching numbers, it just becomes too risky to place a bet on a company where the price doesn’t suggest what the company is actually turning out.
So will LinkedIn stay near and over $100 or will the stock come plummeting back down to earth? Will the investing community adapt to these new “eyeball” stocks or is this just the beginning of the next bubble to burst?