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Stephen Logan

LinkedIn Valued at $4 Billion Prior to IPO

17th May 2011 News, Industry News, Social Media 1 minute to read


On Wednesday night, professional social networking site LinkedIn is going public. Investors will be able to snap up shares in the company for between $42 and $45 as it finally floats on the New York Stock Exchange.

That’s a pretty impressive figure, particularly for an established site that trails some way behind Facebook, the recognised market leader with over 600 million users. However LinkedIn does have a unique proposition that sets it apart from most other social media providers, as it is strictly a network for professionals. This gives it an inherent value; however, whether that equates to $4 billion worth of value remains to be seen.

Following the rigmarole that surrounded the IPO of Demand Media, which ended up being valued at around $1.5 billion, it appears that interest in LinkedIn is reasonably high. In fact so much so that they have raised the cost of the shares, from around $32 or $35 to $45. That’s a pretty big jump, especially for a company that is on the verge of going public.

This clearly indicates that there is still huge demand from investors seeking to own a part of online businesses. It’s hardly surprising either, as the numbers appear to show that LinkedIn is a company with significant potential.

The Wall Street Journal reports that net income rose by 14.1% in the first quarter of this year alone – to around $2.1 million. It also appears to have turned a corner in terms of its financing, having made a solid $15.4 million last year, after recording a loss of $4 million in 2009. This is largely due to the display advertising it features as well as the swelling membership, which now stands at around 100 million.

Whether LinkedIn is inflated at $4 billion or Skype is hugely overpriced with the $8.5 billion Microsoft splashed out remains to be seen. However interest in Internet-based businesses appears to be higher than ever before, with valuations seemingly reflecting this. Perhaps we are on the verge of another great bubble, or maybe they’ll prove to be great investments that continue to add value. Only time will tell.

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Stephen Logan
About the author

Stephen Logan

Stephen Logan was a Senior Content Marketer at Koozai. With four years experience writing exclusively for the search engine marketing industry, he has amassed a wealth of industry related knowledge. He will be breaking news stories and contributing compelling SEO related stories.

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