DealZone

Deals wrap: Copycats sure to follow LinkedIn

May 20, 2011

A day after LinkedIn’s shares more than doubled in their public trading debut, analysts are scrambling to explain why the stock exploded and figure out what happens next.

The professional networking site’s IPO was being closely watched by Facebook, Groupon, Twitter and Zynga to gauge investors’ appetite for Internet companies.

Facebook COO Sheryl Sandberg described a public offering of Facebook shares as “inevitable,” while Evelyn M. Rusli over on DealBook predicts a surge in Internet IPO’s but doesn’t think the market is setting itself up for another tech bubble burst.

It wasn’t just the big four social media sites waiting to go public that were salivating at LinkedIn’s record day, would-be rivals to LinkedIn were also giddy with excitement.

As for future opportunities for investors, Shira Ovide of WSJ.com gives her three reasons to be wary going forward. Nigam Arora of Seeking Alpha also advises investors to be cautious but gives four low risk ways to make money from LinkedIn.

One of the more interesting comparisons to LinkedIn’s meteoric rise in its debut comes from WSJ.com. At one point yesterday LinkedIn’s valuation was roughly $10 billion, trading at nearly 41 times its 2010 net revenue. If Apple were trading at the same multiple, it would have a market value of $2.7 trillion.

In other news John Malone’s Liberty Media Corp has proposed to buy Barnes & Noble for $1.02 billion, nine months after the largest U.S. bookstore chain put itself up for sale.

Barnes & Noble’s shares rose 24.7 percent to $17.60 in after-hours trading after the announcement, suggesting that investors believe other offers may be forthcoming or that Barnes & Noble shareholders will demand more.

Finally, shares in Glencore fell below their issue price of 530 pence, the second day of conditional trading, as investors fretted over its valuation.

“Basically the valuation looks a little bit rich. They worked very hard to get a favorable price and one could argue the only reason it was up yesterday was support from the sponsoring banks,” analyst Nik Stanojevic at Brewin Dolphin said.

 

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