(Bloomberg News) Surging demand for social-media stock and a comeback in venture-backed initial public offerings propelled LinkedIn Corp., the largest professional-networking web site, to more than double on its first trading day.
The stock, trading under the symbol LNKD, gained $8.16 to $102.41 at 9:36 a.m. on the New York Stock Exchange. The shares climbed $49.25, or 109 percent, to $94.25 yesterday on its first day of trading.
LinkedIn finished yesterday with a market value of $8.91 billion, or about 24 times 2011 revenue, assuming first-quarter sales are matched the rest of the year. Facebook Inc., the world's largest social network, would be valued at about $95 billion using the same multiple. The gains bode well for other Internet companies that have put off going public while honing efforts to make money, and they may brighten prospects for the venture capital industry, which lost money amid an IPO drought.
"We knew this was going to be a super hot IPO and gives us further evidence of the enormous appetite for this wave of next- generation Internet companies," Paul Bard, director of research at Renaissance Capital LLC, said in an interview with Bloomberg Television. "You are going to see more companies go public that will try to capitalize on this wave of interest."
'Bubble'
LinkedIn's debut reflects a comeback in IPOs for startups funded by venture capitalists. U.S. venture-backed companies raised $1.38 billion in IPOs in the first quarter, a 47 percent increase from a year earlier, according to the National Venture Capital Association. In the first quarter of 2009 there were no venture-backed IPOs.
Former U.S. Treasury Secretary Lawrence Summers said there's mounting concern that technology stock valuations are in a bubble as investors shake off their apprehension from the 2007-2009 collapse of the credit markets.
"Who could have imagined that the concern with respect to any American financial asset, just two years after the crisis, would be a bubble?" Summers, now a professor at Harvard University, said at a conference today in Shanghai. "Yet that concern is increasingly raised with respect to American technology, with respect to certain other American assets."
Greylock, Sequoia
LinkedIn's backers, which have made more than $100 million in investments in Mountain View, California-based LinkedIn since 2003, also stand to gain. Sequoia Capital has amassed a holding now worth $1.59 billion, and Greylock Partners has a $1.32 billion stake. Hoffman, LinkedIn's founder and chairman and its biggest shareholder, holds $1.8 billion and Bessemer Venture Partners has a stake worth $431.5 million.
Still, LinkedIn may not be able to sustain the market value gained yesterday, said Dan Veru, chief investment officer at Fort Lee, New Jersey-based Palisade Capital Management LLC, which oversees $3.8 billion and bought LinkedIn in the IPO.