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LinkedIn climbs past $100 a share

Marketplace Staff May 20, 2011

LinkedIn climbs past $100 a share

Marketplace Staff May 20, 2011

STEVE CHIOTAKIS: The stock price for LinkedIn is up more than 8 percent in trading today. At about $102 a share. That’s after LinkedIn went public yesterday and its stock surged quickly to twice the initial value. And that’s led to some concerns about a tech bubble forming. Former Treasury Secretary Larry Summers told an audience in Shanghai the fast rise could be spell trouble down the road.

Josh Bernoff is with Forrester Research in Cambridge, Massachusetts. And he’s with us now to talk about it. Good morning.

JOSH BERNOFF: Good morning.

CHIOTAKIS: So, as far as LinkedIn goes, are we seeing the seeds of a new tech bubble with that?

BERNOFF: Well, I certainly think that there’s a lot more exuberance around this offering than you might expect based on the company’s prospects.

CHIOTAKIS: You’re saying prospects of course, they only made like $15 million last year, but here’s a company that’s valued on paper at least, at close to $9 billion right?

BERNOFF: That’s right. They have the chance to go, especially internationally. They are the dominant social network when it comes to business interactions. And there’s certainly the opportunity for them to get more money from marketers for things like advertising. But this is not going to be the next Facebook and I think people who weren’t willing to wait in line to get Facebook stock, may have put their money into LinkedIn instead.

CHIOTAKIS: You bring up Facebook and you know a lot of these social networking companies — Facebook, Twitter — they do have streams of revenue and there are millions of Internet users. Certainly many more than there were back in the ’90s. I mean, how do we look at that?

BERNOFF: I do think that we are seeing now in all of these social sites, enormous ability to get people involved and for marketers to potentially reach them. So this is really exciting, it’s just that there are limits to how much such a company could be worth.

CHIOTAKIS: I mean would you use the word “overvaluation?”

BERNOFF: We don’t access valuations here at Forrester but I certainly would use the words irrational exuberance.

CHIOTAKIS: That’s a Greenspan term, right? From like 10-15 years ago.

BERNOFF: Yes it is and you know he was referring to people who’ve taken leave of their senses when it comes to how much stocks are worth and I think that certainly here when we look at LinkedIn it would be a good idea to realistically access how this dominant company can be valued.

CHIOTAKIS: Josh Bernoff with Forrester Research joining us this morning. Josh thanks.

BERNOFF: Thanks very much.

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