LinkedIn, the online social network for career connections and working professionals that started in 2002, made its initial public offering (IPO) on the New York Stock Exchange (NYSE) on Thursday, May 19, 2011. The stock symbol for LinkedIn Corporation is LNKD. The IPO was a resounding success, as by the end of the trading day, it gave LinkedIn, with approximately 97 million shares outstanding and stock price of roughly $94, a market capitalization of around $9 billion dollars. This compares to other online companies such as Yahoo (Stock Symbol: YHOO) of currently a market cap of about $21 billion, and Google (Stock Symbol: GOOG) of currently around $168 billion.
Considering that LinkedIn’s Price-to-Earnings ratios (P/E) and Price-to-Revenue ratio are quite high, $9 billion is a pretty high valuation for a company that is not yet making that much money. However, investors appear to see value in LinkedIn future’s growth potential. For example, LinkedIn currently has more than 100 million members globally in its database as of March 2011, and is continually having more members join.
As a new model of connections bridging work professionals from all levels online, LinkedIn does have much potential to leverage its established social web presence to be a quality online company. The main challenge for LinkedIn in the future is how to monetize and integrate these online social media tools efficiently and consistently over time, while dealing with competitors that may offer similar services.
LinkedIn was co-founded by cofounders Reid Hoffman, Allen Blue, Konstantin Guericke, Eric Ly, and Jean-Luc Vaillant. It is currently headed by CEO Jeff Weiner.
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