Professional social networking site LinkedIn went public yesterday and immediately saw its share price and valuation surge.
Actually, LinkedIn’s IPO was such a wild ride that one financial analyst called it both exciting and puzzling.
“It’s definitely an interesting day and an exciting one if you’re a LinkedIn shareholder,” said Cem Ozkaynak, co-founder of financial research firm Trefis. However, he added, “It’s a matter of puzzlement and raises curiosity for what other IPOs, like Facebook, will be like.”
Though it’s widely seen as a second-tier player in the world of social networking, LinkedIn’s IPO got a lot of attention because it’s the first U.S.-based social network to complete an initial public offering.
Investors and analysts have been eyeing the move as a possible bellwether for the the social media industry as a whole, as well as Facebook in particular.
Related Story: How LinkedIn can help you reach your targeted audience
On Wednesday afternoon, less than 24 hours before LinkedIn would begin trading on the New York Stock Exchange, the company announced that it was offering up 7.8 million shares at $45 per share.
Just before noon on Thursday, less than three hours after the IPO was launched, LinkedIn shares were selling $115 a pop. By mid-afternoon, the price had dropped, but only slightly, to $104.
At the end of the day, the company was valued at $9.8 billion, about three times the valuation initially projected by Ozkaynak and his firm.
“Based on our valuation, we don’t think it’s worth [$9.8 billion],” said Ozkaynak. “We look at what is the business likely to trend towards, what the key growth drivers are and the cash flow it will generate. We have a pretty reasonable to aggressive forecast on how it will grow.
“We say it will continue to grow. We’re not saying it will do poorly … still that’s a valuation of about $3.2 billion,” he added.
Ozkaynak said it will be interesting to see whether the stock can maintain its current value.
What may be more interesting is what LinkedIn’s success in the stock market will mean for other, bigger social networks that may be looking at filing for their own IPOs. Facebook, for instance, has been rumored to be looking at an initial offering in late 2012 or shortly thereafter.
“I think it bodes really well for Facebook,” said Ozkaynak. “Twitter also … but really Facebook, which is a clear leader with massive scale similar to Google. This bodes really well for their valuation.”
How to use LinkedIn
Here are five ways that you should tap into the LinkedIn excitement, and take advantage of what LinkedIn has to offer:
1. Find a Job
LinkedIn is a favorite haunt of recruiters and headhunters. Career sites like Dice.com or Monster are nice too, but LinkedIn has the added element of networking. You can let potential employers know about your skills and background through your profile just like posting your resume on a job site, but it helps when you are a friend of a friend of the hiring manager and you can get a credible referral through your LinkedIn network.
2. Build Professional Relationships
Success or failure can often be measured by the size of your Rolodex. For the younger audience–that is an old box that would sit on your desk holding the equivalent of index cards with contact information. Now we just call it your Outlook Contacts. LinkedIn provides a means for you to branch out and make new connections within your field, or your company, and to leverage the connections of your connections when necessary.
3. Conduct Research
As a journalist, LinkedIn can be a very valuable resource. The search tools provided in LinkedIn enable very granular searches for LinkedIn members that work for in a certain industry, or for a specific company–or even members that used to work for a given company in case you want some dirt that current employees aren’t at liberty to discuss. You can also research a company before you go into an interview, or accept a job with a new company, so you know what you’re getting into.
4. Seek Advice
Long before there was a Quora, you could use LinkedIn Answers to pose a question to your entire LinkedIn network. Whether you are trying to decide between a MacBook Air or a Dell laptop, or you want recommendations for the best photo-editing app for an Android smartphone, you can turn to your network of business professionals for guidance.
5. Establish a Community
You can form a group on LinkedIn dedicated to a specific topic or industry. You can then invite others to join that group and foster a community to debate and discuss and learn from one another. It is also an opportunity to demonstrate your own knowledge and expertise by sharing what you know within the group.
Granted, you can accomplish many of these same things using Facebook–I am connected with hundreds of colleagues through my Facebook social network. But, LinkedIn lets you focus on professional business relationships without getting distracted by Farmville or Mafia Wars, and LinkedIn has a rich set of tools designed specifically to help members farm the network for valuable information.