It looked like 1999 all over again, said Gary Rivlin in TheDailyBeast.com. LinkedIn, “a solid but second-tier” social-networking site for the career-minded, made its bow as a public company last week, and what a coming-out it was. The stock, offered at $45, shot immediately to $83, then climbed to $122.70 before closing at $94.25, for a gain on the day of 109 percent. Like “the shell-shocked war veteran who flinches each time he hears a loud noise,” market observers immediately announced a return to the bad old days when “half-baked concoctions” such as Webvan and Pets.com went public with barely any revenues to their names, much less profits. But under CEO Jeff Weiner, LinkedIn actually earned a profit of about $15 million last year. This time, investment banks are filtering out all but “established companies with significant revenues” to take public. One IPO does not a bubble make.
You’re kidding, right? asked John Dvorak in MarketWatch​.com. How can a company with $15 million in profits have a stock market value of $9 billion? It’s clearly the beneficiary of the same “mania and desire to own cool little companies” that sent the tech sector hurtling off a cliff in the early years of this century. But this isn’t a straight rerun of the previous tech bubble. Back then, hundreds of flaky companies went public. Today, the very rarity of IPOs feeds a feverish demand for any shares that do find their way to the public markets. But just as in 1999, the inevitable bust is coming. “Fingers will be pointed and the money will dry up again,” and tech start-ups will go begging for the funds they need to grow and innovate.
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