Is LNKD LinkedIn Hot or Not?
Many penny stocks buyers have been asking us about the LinkedIn IPO and our take on it. LNKD is not a penny stock, but showed traders huge penny stock like gains.
Last week we saw LinkedIn IPO (LNKD:NASDAQ) price it’s IPO at $45 only to have it trade up to $122.70 during the course of the day and close the day under $100. This was an amazing percentage gain that is often only reserved for explosive penny stocks. Oddly enough, LNKD was only projected to trade at a modest premium by a very well respected IPO rating service only a few weeks ago. This is despite the fact that LNKD‘s subscriber base had almost tripled to 90 million in the past 3 years and ultimately turned profitable in 2010.
There are reservations by investors after this sharp pullback, mainly because the valuation is being questioned. There also have been some security concerns as well. Members have cited that they have received spam messages from unwanted sources. The business model is also a bit odd for this day and age. LNKD generates a considerable amount of it’s revenue from a paid subscriber base. This method has been successful for LNKD so far, but it’s somewhat outside the normal approach of advertising revenue. On the flip side LNKD only has a small presence in China and India, which makes for potential growth in Asia.
Could the LinkedIn IPO deal bring Facebook or Twitter to market sooner, or does it signal a bubble in the social networking space? Facebook, the most anticipated IPO since Google announced that they will be publishing revenues starting in April of 2012. This is usually synonymous with an IPO announcement.
Remember that LNKD is shortable starting tomorrow and many have been frothing at the mouth to initiate short positions. However, many fund mangers often buy high growth, low float, quality stories for the long haul. So bulls and bears could be potentially be matched up in a tug of war with LNKD ala Netflix stock (NFLX:NASDAQ).
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