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Technology Bubbliciousness Is Back With A Vengeance!
LinkedIn (LNKD) went public with an absolutely unrealistic valuation that illustrates the dangers of ZIRP policy that has carried on for too long. The marketing machinations of investment banks combined with a total lack of respect for risk and the cost of capital has allowed such to happen – and we all know how this is going to end!
In 2010 LinkedIn generated $15m of PAT (profit after taxes) as quoted by the popular financial media. But that’s PAT. What the media and pop media readers are forgetting is what’s available to common share holders, you know the guys holding that stuff trading on the exchanges. LinkedIn has total redeemable convertible preferred stock of 10.8m (4m Series C and 6.8m series D, Convertible preferred stock of 38m (17.2m series A and 17.5m Series B). After accounting $11m for undistributed earnings allocated to preferred stockholders the PAT attributable to common share holders was $3.4m. For those perpetual pessimists who are not well versed in calculating 5 digit PEs… The math already denotes LinkedIn trading at a PE of… well… I’m actually damn near embarrassed to print this… 29,000x.
LinkedIn was expensive going into the IPO. Coming out on the other side it simply got ridiculous.
Relevant operating metrics are trending up, but as you may have guessed… They are trending at a diminished pace. Growth is slowing, not quickening – which is what you will need to justify anything near this atmospheric price.
Subscribers can download valuation scenarios ran for LinkedIn using the most optimistic parameters even remotely possible – 
LinkedIn IPO valuation & comments. Included are the IPO details. We have factored in triple digit annual growth for the next few years with a cap on expenses; used a 500% social networking premium for relative valuation (although Monster Worldwide has a social component for a whole lot less), and the resultant valuations still came out showing a bubbled price simply dying to be burst. Professional and institutional subscribers may access the full model via online spreadsheet here.
Caution should be exercised in shorting this stock in that ~10% of common was floated and it is in high demand. A short squeeze may be imminent.
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The key difference is this time around it is not the UPS man and the and the maid buying the stocks on e-trade. So whoever goes down when the silly ship sinks this time can truly can go fuck themselves.
I've posted forum thread on the same....
http://www.zerohedge.com/forum/why-linkedin-ipo-really-sucked
key word: "media." Just what are they "Linked into"? criminals make money--the question always becomes "but for how long?" wrong question. right question? "don't ask any questions." and ask "where is our government in all this?" laughing at the Trail of Tears? or just "making fun of Mormons?" my guess: "a lot of both and lovin' every minute." great stuff--but i'd still be a buyer of Social Media--and "keep your eyes on their prize." we're still taxpayers too when last i checked. where is "non-claim" anyways?
http://www.theinquirer.net/inquirer/news/2073085/dead-explosion-chinese-...
more fun stuff from the ipad factory in china. this type of report makes me feel real good about myself...
there is a bubble in social networking stocks, the largest technology names are not in a bubble, anyone investing in LNKD at these levels deserves to lose all of their money
God's work, Reggie.
You know as well as I do this is the financial abortion clinic preparing the table for Facebook.
29,000% bullshit, and the taxpayer gets the stirrups.
That's right. Lame ass band opening for the big time thiefs.
Reggie, you're my favorite contributor for hard financial news analysis. I think the first day explosion is a result of ignorance combined with a market that wants to be bearish but fears the Bernank. They can either go liquid or go long, so why not go crazy?