The Kool Aid delicious valuations in social media continue. The latest is everyone's favorite professional networking site - LinkedIn (LNKD). As with all the companies (well most of them) in this broad sphere of 'social networking' the contention is not with the growth metrics, but the valuations all this easy money is imparting on the business. While quarterly revenue is up 110% year over, it was off a tiny base of $43M. And what incremental profit did that 110% revenue growth generate? Not much - only 14% year over year. Obviously expenses are ramping up almost 1:1 with revenue. Eventually net income is what matters....
At the bottom of the current range, LinkedIn is being valued at $3 billion. Their latest quarter was a $93M print. We won't use trailing 4 quarter revenue (as we should) to be nice, but even if we annualize the $93M over a year that's under $400M per year, or nearly a 10x sales value. For a company growing the bottom line under 15%. And we can be sure this is one of those stocks that will pop 50%+ on IPO day so that $3B valuation is going to be $4.5B or $5B. Oh well - compared to RenRen (RENN) or Youku.com (YOKU) I guess it's a steal at these prices. Party on Garth.
- LinkedIn increased its IPO plans Monday, saying it intends to raise a maximum of $315.6 million by offering 7.84 million shares at $32 to $35 per share, according to an amended S-1 filing.
- The total offering (NYSE: LNKD) would raise a maximum of $315.6 million at the top of the range, not including fees. The company expects net proceeds of $146.6 million at the midpoint of that range. If underwriters increase the offering LinkedIn could raise up to $183.2 million.
- The $315.6 million number is way up from LinkedIn’s previous filing in January, when it said it planned to raise $175 million.
- The company will have 94.5 million shares in total after the IPO, giving the company a valuation above $3 billion even at the low end of the IPO range.
- For the quarter that ended March 31, LinkedIn reported net revenue up 110% to $93.9 million, from $44.7 million in the year-ago period. The company has three main revenue lines: hiring solutions, marketing solutions and premium subscriptions. Hiring solutions is the largest piece, at $46 million in revenue in the quarter–it also grew the fastest, up 174% from the year-ago period.
- Net income in that most recent quarter was $2.1 million, up 14% from $1.8 million in the year-ago period.
- LinkedIn’s largest shareholders are founder and chairman Reid Hoffman with 21.2%, Sequoia Capital with 18.7%, Greylock Partners (where Hoffman is now a venture capitalist) with 15.6%, and Bessemer Venture Partners with 5.1%. They are all selling very small pieces of their stakes. Morgan Stanley, Merrill Lynch and J.P. Morgan are leading the deal.