Article Contributed by Tanner Mangum
When LinkedIn went public with its IPO, stock prices immediately skyrocketed. This is not uncommon with tech stocks when they first hit the streets. Investors sometimes seem to get a little star-struck when it comes to tech stocks, possibly because everyone wants to be in on the ground floor of the next Apple or Amazon or Google.
LinkedIn might not be on that level, however.
When LinkedIn first went public, shares of its stock soared to an incredible $122 a share. For some investors, it might have seemed as if they’d finally found that elusive golden goose so many had long sought. With the passage of time, however, shares of LinkedIn dropped down to around $60 a share, squelching any long-term dreams of endless riches.
Right now, LinkedIn is in a very precarious position. The stock is valued at approximately $72 a share, but when it first appeared as an IPO, its underwriters listed it at around $45 a share. Now, there hasn’t been any great change in LinkedIn’s numbers or subscribers, so there is no rational reason for the stock being valued at this level.
Not to stir up the pot, but this is potentially dangerous.
When LinkedIn is valued at a level that does not make any logical sense, prevailing wisdom indicates that the price bubble could burst at any moment. Right now, analysts are actually basing LinkedIn’s price on speculation. At the same time, it almost appears the analysts are completely pushing aside any potential risks.
This is the path to a stock smashing into the ground. When analysts attempt to actually influence the market by pumping up one side of a company’s value while also pushing down concerns about a company’s potential risks, the potential is definitely there for an entire house of cards to come falling down.
I like LinkedIn. I probably log into it once a week, though. Job recruiter’s aside, does this social networking site justify logging in everyday? Is there still room for a huge upside?
Is there a stiff wind heading towards LinkedIn or am I blowing things out of proportion?
About the Author
Tanner Mangum is a passionate traveler, future ironman, and an Apple Junkie. He lives outside Salt Lake City, Utah.