Looks like everybody loves LinkedIn (NYSE: LNKD). The IPO that just a few days ago floated a $32 to $35 price tag hit the market at $45 this morning.
Even that lofty price wasn't enough. The social networking website operator opened at $83 and has surged past $100 per share at noon trading.
There are plenty of good things to say about LinkedIn. The site that connects white-collared pros has become the new way to smoke out job leads, industry news, and peer referrals. LinkedIn virtually connects its 100 million members (and counting). The site served 5.5 billion pages during the fourth quarter of last year. In other words, there are people out there actually using the site.
Revenue more than doubled to $243.1 million last year, as user growth and new monetization efforts kicked in. Profitability isn't very scintillating. After years of losses, LinkedIn squeezed out a modest profit of $15.4 million last year.
However, in the wake of its IPO, the company now has roughly 94.5 million shares outstanding. Is LinkedIn worth today's valuation of $7.8 billion at the open, and nearly $10 billion at the intraday high?
Dice Holdings (NYSE: DHX) is the closest match to LinkedIn. Its namesake site provides a community hub for folks seeking IT jobs. Dice also encompasses other niche-specific sites, including ClearanceJobs.com for security jobs and eFinancialCareers.com for prospective moneymakers.
Dice isn't as sexy as LinkedIn, but it did earn more -- $18.9 million -- last year on $129 million in revenue. In addition, Dice now expects a profit of $32.8 million this year (and adjusted EBITDA of $74 million), with revenue climbing 37% to $177 million.
Dice is far more profitable than LinkedIn, though today's debutante is growing its larger top line faster. However, Dice packs a roughly $1 billion market cap. Is LinkedIn really worth 10 times more than Dice? I don't think so.
Analysts see revenue growth slowing at LinkedIn, and expect that a small loss this year will replace last year's profit. Buy in if you want to. I'll write you a glowing LinkedIn peer referral if the company bursts into flames in the coming weeks.
I get that folks are hungry for social networking. If they can't buy Facebook, they'll buy any successful proxy. The IPO pop for China's Renren (Nasdaq: RENN) earlier this month, and the wild swings for Latin America's Quepasa (AMEX: QPSA) in recent months, prove that demand is greater than supply. However, at the end of the day, a stock must be weighed on the basis of its fundamentals. LinkedIn is an important company, but it's not as valuable as today's investors think.
At what price would you buy LinkedIn? Share your thoughts in the comment box below?
