It's really amazing what's possible when you get a group of uninformed traders together and dazzle with a smoke-and-mirrors display. You'll notice I said traders and not investors, because no investor in their right mind would go anywhere near LinkedIn (Nasdaq: LNKD) -- especially not after yesterday's meteoric rise, which at one point had the stock up 173%.

Reminiscent of the dot-com bubble days of the late 1990s, traders simply couldn't snatch up shares of the social media website quickly enough. As fellow Fool Morgan Housel pointed out, based on trading in the dangerous secondary markets, shares have moved from under $20 to yesterday's closing price north of $94 in just a shade over one year.

But is this move justified? I have to say in the most resounding way possible, "Heck no!"

Partying like its 1999
History has resoundingly shown that IPO-related euphoria rarely lasts longer than a few days. Some of the largest IPO gains in history were quickly wiped out in a matter of months, including high-profile tech names Akamai Technologies (Nasdaq: AKAM) and Geeknet, the company formerly known as VA Linux. Investors quickly became aware shortly after these IPOs that the valuations of these companies had large disconnects from their bottom line results. Since their IPOs more than a decade ago, Akamai has lost 78% of its value while Geeknet is down a laughable 99%.

LinkedIn's IPO has also dangerously encouraged uninformed investors that investing in secondary markets is OK, when in actuality, it's more dangerous than ever. Facebook, Groupon, and Twitter boast implied valuations (according to SharesPost) of $79.4 billion, $14.8 billion, and $8.5 billion, respectively -- yet these companies have yet to fully open their books for financial scrutiny. Groupon, for example, could come under increasing pressure as the barrier to entry into its business is low. Groupon's customer loyalty could disappear in a heartbeat if another site is offering a better deal. Likewise, it remains to be seen if Twitter can even produce a meaningful profit despite its valuation having doubled within the past year, according to SharesPost.

LinkedIn's disconnect
Then we have the actual figures behind the LinkedIn IPO; more specifically, the $243.1 million in recorded revenue in 2010 and the $15.4 million in profits. Using these figures and comparing them to the company's 94.5 million shares outstanding, we arrive at a trailing-twelve month price-to-sales of 39.5 and a price-to-earnings ratio of 624. I'll now pause while you contain your laughter!

I can venture a guess as to what LinkedIn optimists must be thinking: "Well, what about Qihoo 360 Technology (Nasdaq: QIHU) and (Nasdaq: YOKU)? Qihoo is barely profitable, while Youku is unprofitable, yet both are sporting multi-billion dollar valuations. Why not LinkedIn as well?"

Although I disagree with the current valuation of both companies, I can at least justify the enthusiasm for market leaders in a quickly growing economy that are anticipated to see 70%-plus revenue growth rates next year. LinkedIn is trudging along at double, or triple the market value of these two high-growth companies, yet estimates are set at a similar 70% growth rate and management expects revenue growth rates to continue declining.

LinkedIn: an emotional flaw
We need to see the LinkedIn IPO for what it is: an emotional low point for investors. Traders allowed their emotions to get the best of them, and emotional trading is rarely successful. It's for this reason that I'd be a seller of LinkedIn at these levels, and I'm nearly convinced that the stock will never see the $120 per-share price tag ever again.

Can LinkedIn overcome the hype and head higher or will the fundamentals be the straw that breaks this IPO's back? Share your wisdom in the comments section below and consider tracking LinkedIn as well as your own personalized portfolio of stocks with My Watchlist.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.