Linkedin Going IPO: Concerns of Its Value Being 200 Times Its Earnings


On Thursday Linkedin will have the ticker symbol of LNKD.  Linkedin is finally going to become an Initial Public Offering or IPO.  Becoming an IPO means it will be a publically-traded company.  In this case, the company has the hope of raising $274 million.  

IPO’s have been of concern recently as companies are being valued at far higher levels than they are returning.  If Linkedin is able to price their stock in $32-35 range, that would make their value just over $3 billion.  According to the Wall Street Journal, that is “nearly 200 times last year’s earnings of $15.4 million.”  

Many companies have been using venture caplitists to fund them until they can go IPO like Linkedin.   However, the dot com crash has had a big impact on how venture capitalists invest in the current market. To understand why, it is important to know a little history about the impact of the Internet and why these investors are leery. For more information about fear of IPOs and over-valued companies, click here.