Financial News

[southsider2k5]

I think I have been officially saying this for years now. And when the economy collapses, the government collapses.

[Balta1701]

When social network LinkedIn's stock skyrocketed after its IPO debut, the financial community reeled at the fact that LinkedIn's underwriters, Bank of America Merrill Lynch and Morgan Stanley, had set the price so low. As Henry Blodget at Business Insider indicated, they set the price at $45 a share when they could have asked for $90, and thus effectively cheated LinkedIn out of over $130 million.

 

Joe Nocera furthers this claim against LinkedIn's underwriters at The New York Times, noting that while there is "nothing wrong with a small 'pop' in the aftermath of an IPO," such a tremendous rise in stock price indicates that "in reality, LinkedIn was scammed by its bankers."

 

The fact that the stock more than doubled on its first day of trading — something the investment bankers, with their fingers on the pulse of the market, absolutely must have known would happen — means that hundreds of millions of additional dollars that should have gone to LinkedIn wound up in the hands of investors that Morgan Stanley and Merrill Lynch wanted to do favors for. Most of those investors, I guarantee, sold the stock during the morning run-up. It’s the easiest money you can make on Wall Street.

Link(ed in).

[mr_genius]

lINK

 

The EU is imposing tariffs on Chinese goods.

 

http://www.2point6billion.com/news/2011/05...ducts-9320.html

 

http://euobserver.com/884/32336

 

Experts said the move was likely to start of a series of tit-for-tat retaliations and worsening trade relations between the two sides.

 

"As the EU subsidises local production in various sectors, China is not short of sectors to retaliate against," Hosuk Lee-Makiyama of the Brussels-based European Centre for International Political Economy (ECIPE) think-tank said in a policy brief.

 

"It has already imposed a tariff on potato starch from the EU and more cases are forthcoming," he added.

 

"A trade war with China on subsidies seems now unavoidable."

Edited May 22, 2011 by mr_genius

[NorthSideSox72]

Link(ed in).

I personally blame the idiots buying the stock up that high, as much as the underwriters. Seriously, I looked a bit at LinkedIn before the IPO... for that stock to run up like that, to establish that level of market cap, for a business whose revenue streams are very limited in my eyes... its a little reminiscent of some of the tech stock run-ups of the late 90's. I would avoid that stock like the plague.

 

[Y2HH]

I personally blame the idiots buying the stock up that high, as much as the underwriters. Seriously, I looked a bit at LinkedIn before the IPO... for that stock to run up like that, to establish that level of market cap, for a business whose revenue streams are very limited in my eyes... its a little reminiscent of some of the tech stock run-ups of the late 90's. I would avoid that stock like the plague.

 

It's CLEARLY .com 2.0.

 

Anyone that says LinkedIn is a good investment at this valuation knows nothing about investing. LinkedIn makes ~15M per YEAR profit. Not per quarter. Not per month. Per YEAR.

 

That pegs their current stock price at about a 600 P/E ratio.

 

For comparison sake, Apples P/E ratio 15.

 

That means people are only willing to pay 15 times what Apple makes per share...and this is a company that makes more profit in a single DAY than LinkedIn makes in an entire year. At the same time, people are saying they're willing to pay SIX HUNDRED times earnings for a social network with almost no revenue stream that will be an afterthought when Facebook goes public?

 

This run up is speculation and day traders, not investment. They're hopes are that people run LinkedIn's price into the 200 range so they can dump it all, trying to not repeat the same mistake they made in the .com 1 bubble, where instead of dumping it all, they held it thinking it would go even higher...only it crashed instead.

 

The market hasn't changed...companies are worth what they're worth, and the tried and true calculation of what they're worth ALWAYS ends up being the real value in the end.

 

Bottom line, LinkedIn isn't worth half of it's current price, no, scratch that, it's not worth 15% of it's current price...so if you got in the IPO and made a profit, just get out while you can.

Edited May 23, 2011 by Y2HH

[southsider2k5]

I personally blame the idiots buying the stock up that high, as much as the underwriters. Seriously, I looked a bit at LinkedIn before the IPO... for that stock to run up like that, to establish that level of market cap, for a business whose revenue streams are very limited in my eyes... its a little reminiscent of some of the tech stock run-ups of the late 90's. I would avoid that stock like the plague.

 

 

It's CLEARLY .com 2.0.

 

Anyone that says LinkedIn is a good investment at this valuation knows nothing about investing. LinkedIn makes ~15M per YEAR profit. Not per quarter. Not per month. Per YEAR.

 

That pegs their current stock price at about a 600 P/E ratio.

 

For comparison sake, Apples P/E ratio 15.

 

That means people are only willing to pay 15 times what Apple makes per share...and this is a company that makes more profit in a single DAY than LinkedIn makes in an entire year. At the same time, people are saying they're willing to pay SIX HUNDRED times earnings for a social network with almost no revenue stream that will be an afterthought when Facebook goes public?

 

This run up is speculation and day traders, not investment. They're hopes are that people run LinkedIn's price into the 200 range so they can dump it all, trying to not repeat the same mistake they made in the .com 1 bubble, where instead of dumping it all, they held it thinking it would go even higher...only it crashed instead.

 

The market hasn't changed...companies are worth what they're worth, and the tried and true calculation of what they're worth ALWAYS ends up being the real value in the end.

 

Bottom line, LinkedIn isn't worth half of it's current price, no, scratch that, it's not worth 15% of it's current price...so if you got in the IPO and made a profit, just get out while you can.

 

Thank you, and thank you. One the Blue Sky clears, buy puts, if it hasn't crashed already.

[Jenksismyhero]

It's CLEARLY .com 2.0.

 

Anyone that says LinkedIn is a good investment at this valuation knows nothing about investing. LinkedIn makes ~15M per YEAR profit. Not per quarter. Not per month. Per YEAR.

 

That pegs their current stock price at about a 600 P/E ratio.

 

For comparison sake, Apples P/E ratio 15.

 

That means people are only willing to pay 15 times what Apple makes per share...and this is a company that makes more profit in a single DAY than LinkedIn makes in an entire year. At the same time, people are saying they're willing to pay SIX HUNDRED times earnings for a social network with almost no revenue stream that will be an afterthought when Facebook goes public?

 

This run up is speculation and day traders, not investment. They're hopes are that people run LinkedIn's price into the 200 range so they can dump it all, trying to not repeat the same mistake they made in the .com 1 bubble, where instead of dumping it all, they held it thinking it would go even higher...only it crashed instead.

 

The market hasn't changed...companies are worth what they're worth, and the tried and true calculation of what they're worth ALWAYS ends up being the real value in the end.

 

Bottom line, LinkedIn isn't worth half of it's current price, no, scratch that, it's not worth 15% of it's current price...so if you got in the IPO and made a profit, just get out while you can.

 

I don't know if it's overvalued or not, but LinkedIn has a very strong chance of becoming essentially Facebook for business, a market that Facebook will never be able to capture and a market that has no other competitors. 5 years ago if Facebook had gone public with a high price like this I'm sure your reaction would have been the same.

 

[southsider2k5]

I don't know if it's overvalued or not, but LinkedIn has a very strong chance of becoming essentially Facebook for business, a market that Facebook will never be able to capture and a market that has no other competitors. 5 years ago if Facebook had gone public with a high price like this I'm sure your reaction would have been the same.

 

It would still be the same today.

[bmags]

I don't know if it's overvalued or not, but LinkedIn has a very strong chance of becoming essentially Facebook for business, a market that Facebook will never be able to capture and a market that has no other competitors. 5 years ago if Facebook had gone public with a high price like this I'm sure your reaction would have been the same.

 

Yeah, I think LinkedIn's opening was ridiculous, but there are many things different than the first tech bubble. First, that most of the big tech companies are profitable and have real business models, and are not just doing fundraising rounds and spending it as quick as they can. LinkedIn's b/c of their business angle has a lot of opportunity for profit growth. They are just tapping into that now. But they are a lot further along than twitter.

[Y2HH]

I don't know if it's overvalued or not, but LinkedIn has a very strong chance of becoming essentially Facebook for business, a market that Facebook will never be able to capture and a market that has no other competitors. 5 years ago if Facebook had gone public with a high price like this I'm sure your reaction would have been the same.

 

Not at all.

 

My reaction isn't based on what I "think" a company should be worth...it's based on what the company is actually worth.

 

The nice thing about public companies is their books are open in the legal sense of the word, so unless they're cheating, we know how much money they're making. Knowing that, and the number of shares outstanding, we can easily compute what a share is worth based on how much money they generate.

 

If you are generating BILLIONS in profit, your valuation is probably high, unless you have 10's of billions of shares outstanding, which most companies do not.

 

LinkedIn cleared 15 Million dollars in profit last year, and has already said they expect to LOSE money in 2011.

 

That does not = a high value.

Edited May 23, 2011 by Y2HH

[Balta1701]

Why would you do an IPO if you didn't expect to lose money? Isn't that the point, to raise money from investors to finance expansion?

[Jenksismyhero]

Not at all.

 

My reaction isn't based on what I "think" a company should be worth...it's based on what the company is actually worth.

 

The nice thing about public companies is their books are open in the legal sense of the word, so unless they're cheating, we know how much money they're making. Knowing that, and the number of shares outstanding, we can easily compute what a share is worth based on how much money they generate.

 

If you are generating BILLIONS in profit, your valuation is probably high, unless you have 10's of billions of shares outstanding, which most companies do not.

 

LinkedIn cleared 15 Million dollars in profit last year, and has already said they expect to LOSE money in 2011.

 

That does not = a high value.

 

I don't think you mean this as literally as you seem to, but this is kind of a ridiculous statement. Potential growth doesn't have value? "Value" is a completely fabricated construct anyway.

[southsider2k5]

I don't think you mean this as literally as you seem to, but this is kind of a ridiculous statement. Potential growth doesn't have value? "Value" is a completely fabricated construct anyway.

 

So LinkedIn has 40 times the growth potential as Apple? I don't buy that for a second.

[Jenksismyhero]

So LinkedIn has 40 times the growth potential as Apple? I don't buy that for a second.

 

Right, which is why I said I don't think he meant it that way. But to say that "value" is ONLY based on known factors today, like revenue, isn't really accurate.

[NorthSideSox72]

Right, which is why I said I don't think he meant it that way. But to say that "value" is ONLY based on known factors today, like revenue, isn't really accurate.

And to that note... someone tell me about future revenue streams for LinkedIn. They are just not that big, even if LinkedIn becomes uber-huge, you really only have two streams - advertising and some small amount for premium account types. The future growth is just not in the ballpark with this price.

 

[Y2HH]

So LinkedIn has 40 times the growth potential as Apple? I don't buy that for a second.

 

This is more in line by what I mean.

 

I'm not saying LinkedIn has NO value. But it's growth will be minimal, at best, especially when Facebook goes public.

 

I just don't see it with LinkedIn, and if they weren't a .com going IPO right now, they'd be trading at 12$.

Edited May 23, 2011 by Y2HH

[bigruss]

And to that note... someone tell me about future revenue streams for LinkedIn. They are just not that big, even if LinkedIn becomes uber-huge, you really only have two streams - advertising and some small amount for premium account types. The future growth is just not in the ballpark with this price.

IF they become the go to search engine for available jobs, they could make quite a bit of money not only from users but also companies wanting to post on there.

[Y2HH]

IF they become the go to search engine for available jobs, they could make quite a bit of money not only from users but also companies wanting to post on there.

 

That's going to be a problem since they're not even on the job search radar right now.

 

People post profiles there but nobody recruits from there...it's more like a personal networking site so people can feel important or something, I'm not even sure. I've had a LinkedIn profile for years and never actually searched around the site, and really don't care to do so.

 

Monster and Dice are FAR more popular job search engines. As a matter of fact, I wouldn't even think of using LinkedIn to search for a job...it's the last place I'd go.

Edited May 23, 2011 by Y2HH

[bmags]

it's the last place I'd go.

 

It's the last place you'd go? I know you climb hyperbole mountain all the time, but linked in was actually a great resource for job searching and people DO recruit from there.

[bigruss]

This is more in line by what I mean.

 

I'm not saying LinkedIn has NO value. But it's growth will be minimal, at best, especially when Facebook goes public.

 

People login to Linked in once a month and add some contacts to their list, but that's about all they do. I've had a *free* linked in account for years, I have a bunch of accept/deny letters in my maibox, and I'll login once a month and click accept or deny, but I don't spend much time looking through profiles, etc...and I don't know anyone that does.

Ive argued over the value of LinkedIn with many people lately, I personally feel that it is a waste of time for most job seekers, especially college students.

 

That said, alexa.com shows it being the 17th most frequented site in the world, and 11th in the states, that's a ton of value right there. But the big difference between facebook and LinkedIn is that the average LinkedIn visit is much shorter than that of Facebook, which could be a huge difference for advertisers.

[bigruss]

That's going to be a problem since they're not even on the job search radar right now.

 

People post profiles there but nobody recruits from there...it's more like a personal networking site so people can feel important or something, I'm not even sure. I've had a LinkedIn profile for years and never actually searched around the site, and really don't care to do so.

 

Monster and Dice are FAR more popular job search engines. As a matter of fact, I wouldn't even think of using LinkedIn to search for a job...it's the last place I'd go.

LinkedIn has so many profiles on there already that they could become huge players, and I believe the job site part of LinkedIn is less than a year old (I remember getting emails just a few months ao from them to see their beta version).

 

But I agree, it would not be my first place I would go to find a job, not yet at least. But the potential is pretty big there.

[Y2HH]

It's the last place you'd go? I know you climb hyperbole mountain all the time, but linked in was actually a great resource for job searching and people DO recruit from there.

 

They weren't even a job search site until like 9 months ago. That is all.

[bmags]

They weren't even a job search site until like 9 months ago. That is all.

 

But it has value in job searching beside just looking for job openings.

[southsider2k5]

That's going to be a problem since they're not even on the job search radar right now.

 

People post profiles there but nobody recruits from there...it's more like a personal networking site so people can feel important or something, I'm not even sure. I've had a LinkedIn profile for years and never actually searched around the site, and really don't care to do so.

 

Monster and Dice are FAR more popular job search engines. As a matter of fact, I wouldn't even think of using LinkedIn to search for a job...it's the last place I'd go.

 

That's the big problem as I see it. There is a lot of competition already in the market they are going into. It is much harder to make money that way.

[Y2HH]

But it has value in job searching beside just looking for job openings.

 

I'm sure it does.

 

It simply doesn't have the value of it's current price.

 

It's like agreeing to pay 5,000$ for an iPad2, when they're worth ~600$. I'm not saying people don't have the right to be stupid and pay that much...but I am saying it's stupid.