If I Don’t Write a Post About LinkedIn, Will I Get Kicked Off of The Internet?

Blah blah blah LinkedIn etc etc etc.

If you’ve been living in a cave, or in a compound in Abottabad without internet access, you might not know that LinkedIn’s IPO started trading today: $LNKD – and opened up nearly a smooth 100%.  As I write this post, it’s up $62 to $107, for a 139% first day gain.

It seems everyone has already written their piece on LinkedIn, and I’ll get to some links in a minute, below, because there’s a lot of stuff that’s worth the 5 minutes to read.  First, I want to talk about one specific point: valuation.

LinkedIn’s current valuation (over $ 10B, at last check) is crazy. There’s no doubt about it.  You can’t sensibly value it on any sort of metric and look sane – but that’s not the point.  The point, when we’re talking about companies that look expensive even when you take estimates out a few years, is the question of whether these companies can “grow into” their valuations and eventually change the world.  Essentially, “can they become a disruptive technology?” – one that changes the way you live/work/consume/sleep, etc – and more importantly, can they make money doing it?

There are three companies off the top of my head that come to mind right now on this topic:  Netflix ($NFLX), OpenTable ($OPEN) and LinkedIn ($LNKD).  All three companies are somewhere between “wicked expensive” and “they are valued higher than they could possibly be valued if everyone in the world used them.”

NFLX 2 year chart

Quickly, I’d say that NFLX has a chance of growing into their valuation – they are clearly on the forefront of a techno-shift in media consumption.  If you told me that I was going to be exiled on a desert island for a year, and I had to either buy or short the stock for that time period, I’d still rather be short it, but NFLX is the one of these three that I see as least likely to decline by 75% at some point.

OPEN 2 year chart

$OPEN is one that I don’t really get – I tried to short this stock at $30, and thankfully was unable to borrow it.  I lived in NYC, and I have used OPEN, but it’s no sort of life-changing advancement, and I’ve heard anecdotal reports of many restaurants who use it hating it.  Is it possible that OPEN can leverage future synergies (Groupon seems like a natural partner!) and revolutionize the reservation business?  It’s possible, but again, it seems unlikely in my view.

Then there’s LinkedIn.  I have had a LinkeIn profile for many years.  I don’t know why.  It’s like Facebook for people who don’t want to use Facebook. What that really means, I think, is that you don’t actually go to the website on a regular basis, or even, ever.  No – I don’t want to join your network just because we worked at the same firm 8 years ago and you saw me in the hallway.  Yes – you can hire me to sit at home and blog about your company or tell you how stupid you are for misunderstanding leveraged ETF mechanics – amazingly, these sorts of offers never come through to me via my LinkedIn profile!

Surely some of you out there find some value in LinkedIn – please, do weigh in and tell me what that value is.  I generally agree with The Analyst’s post on the subject today:

“Linkedin is like a necessary evil, not something we do because we enjoy it or because it makes our lives better/easier/more interesting.  No one thinks to themselves “I wonder if anyone in my professional network has added anybody to theirs, or if they’ve updated their work experience?” and then logs in to check with baited breath.  No one “surfs the ‘link” like they “surf the ‘book” on their lunch break.  No one follows their dream employers’ pages like they do their favorite sports teams.  No one lives vicariously through other people’s work experience like they do other people’s Caribbean vacation pictures.  No one comments on “status updates.”  No one “shares” videos/pictures/articles/whatever on Linkedin.

So, will LinkedIn grow into their valuation?  Will they change the world – the way we network professionally?  I tend to doubt it, but that’s just one man’s opinion.

Oh – I did have one question, for the securities lawyers and or conspiracy theorists in my audience.  LinkedIn has an SEC filing dated yesterday, which contains the following:

LinkedIn Corporation submitted an application under Rule 406 requesting confidential treatment for information it excluded from the Exhibits to a Form S-1 registration statement filed on January 27, 2011, as amended.

Based on representations by LinkedIn Corporation that this information qualifies as confidential commercial or financial information under the Freedom of Information Act, 5 U.S.C. 552(b)(4), the Division of Corporation Finance has determined not to publicly disclose it. Accordingly, excluded information from the following exhibits will not be released to the public for the time periods specified:

Exhibit 10.13A through March 1, 2014
Exhibit 10.20 through April 30, 2012

I can’t help but wonder what information was so confidential that they were granted approval to exclude it from the public filings, but was important enough to show the SEC.  Then again, it’s quite possible/likely that this happens all the time.

For more on LinkedIn – valuation, IPO pricing, company in general – much has been written already today:

IPO Buyers are LinkedIn Stupidity” – Evan Newmark, WSJ Blog

Why LinkedIn Sucks” – The Analyst, @ Stone Street Advisors

The Most Expensive Stock In America” – Jack Hough, Smartmoney.com

Congratulations LinkedIn, You Just Got Screwed out of $130MM” – Henry Blodget, BI

Why It’s Almost Impossible to IPO a Hot Company Without a Huge Pop” – Pascal-Emmanuel Gobry, SAI (KD: for the record, I agree with Blodget on this)

Here are Wall Street’s Real Estimates for LinkedIn” – Henry Blodget, BI

Jim Cramer thinks the price action is “preposterous” – BI

-KD

I have no positions in LNKD, OPEN or NFLX

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