LINKed in (LNKD) IPO today ( initial public offering)
ALL I HAVE TO SAY IS WOW !!– as i had flashbacks to the .com IPO's i traded in late 1990's
Today LNKD had its IPO debut & boy did it move ( was up 172+% from the $45 IPO price & as high as 53%+ up intraday from the $80 low –was this an IPO, 1990's .com flashback or a penny stock type mover in disguise?)
The IPO price was changed to $45 but opened at $83 and went as low as $80 and as high as $122.70 – by after hours (while typing this blog) it was at $92.99.
When I was watching it today I had flashbacks of the stocks I traded during the .com days of late 1990's. These would be a daily occurence just many would continue higher then what LNKD did. Many of those .com companies are now gone but the ones that did survive are far fewer & much stronger today like $GOOG $EBAY $AMZN $YHOO etc. ( forget AOL though that was a total mess after the mergers)
Although LNKD is much different to many of those .com iPOs from years past, they do have impressive sales and growth compared to the 1990's .com's which had lot of losses / no sales but lot of potential ( we thought) but can Linkedin substain the 100%+ growth rates ?
I did not trade LNKD today but we had a good discussion in the chatroom about it.
Here is the info on LNKD :
From SEC Linkedin $LNKD prospectus filing we see that they cover 100% of all fortune 500 companies ( both a good thing & bad thing since their growth from those companies may get saturated) http://www.sec.gov/Archives/edgar/data/1271024/000119312511145240/d424b4.htm
They have 1 new member per second
They are in over 200+ countries
over 2,000,000 groups on linked in
and over 100,000,000 customers
The firm operates an online professional network designed to help members find jobs, connect with other professoinals, and locate business opportunities. The site has grown to reach more than 100 million users in some 200 countries since its launch in 2003. LinkedIn is free to join; it offers a paid premium membership with additional tools, and sells advertising. It additionally earns revenue through its job listing service, which allows companies to post job openings and search for candidates on LinkedIn. Former CEO and current chairman Reid Hoffman co-founded the company, which filed to go public in 2011.
1) they do have nice sales of $243 Million & impressive 102% growth rate but if they grow at 100% per year they would need to also grow their customer base
– from 100 mill to 200 mill to 400 mill to 800 mill within the next 3 yrs at that point they would be bigger than Facebook who has much more than 500Mill customers now. With LNKD customers being specific to business , looking for jobs or business opportunities that makes this a much smaller market potential. So i'm sure they will have strong sales & growth going forward but doubt they could keep that up for more than 1 or 2 years.
2) They could increase sales per customer but companies will only hire as many people as needed so there will be a cap on the amount of sales they can make to each individual larger or medium sized company. So unless everyone becomes unemployed or we get to 6% unemployment thanks to a strong market recovery then I can't see them continue that increase in per customer sales.
3) I see a company like Facebook or Twitter to have far greater potential growth and increased income potential longer term.
4) Even in their prospectus they point as one of the negatives to be that their growth rates will slow down longer term.
5) the benefits are they are first out the gate with this but they will also face increased competition. If someone like Facebook or Twitter or other online company with a customer base much larger started to go after the same market it would affect their sales. ( also one of the negatives in their prospectus that they realize)
Here are the risks based on their prospectus for Linkedin
Here is an intraday chart on LNKD today ( May 19th , 2011) with notes.
I would wait for it to sell off towards $80 or base over $90 before entering this. If you are aggressive only play it into key breakouts like $100 and $120+ again but with tight stops.
I don't like it longer term but would consider it as an IPO play based on strategies i've used in the past playing dips like on $DANG $YOKU $GM (My IPO strategy ) — This one may be different since its one of the strongest IPO's we've seen since $GOOG but just be careful buying it over $100 and if you do keep a tight stop under that level
IPO (initial public offering) trading Strategy that I used on recent IPO's like $GM , $YOKU $DANG & past 2010 /2009 IPOs like $DGi $CCM $MJN $OPEN $TSLA $CYOU and $LIWA & others ==http://bit.ly/b47rQ8
Hope this analysis helps & Happy IPO trading,