By David Berman
Soon after LinkedIn Corp. (LNKD) began trading last month, some observers were up in arms that underwriters had left so much money on the table. The shares were priced in the initial public offering at $45 (U.S.), opened on their first day of trading at $82 and promptly popped up to a high of $122, implying that the shares should have been priced much higher to begin with.
Henry Blodget, writing on Business Insider, estimated that underwriters "screwed the company and its shareholders to the tune of an astounding $175 million." Other observers were simply amazed by the strong demand among investors for social networking sites, and initial public offerings in general.
Those days are over. LinkedIn has been slumping since that first day of euphoria, falling a total of 46 per cent from its first-day high. It is also nearly 20 per cent below its opening price, meaning that just about anyone who has bought the stock on the open market over the past month is nursing a nasty loss.
Pandora Media Inc. (P), the Internet radio company, began trading this week with similar enthusiasm. The shares were priced at $16 in its IPO and flew to a high of $26 on the first day of trading on Wednesday. And now? In afternoon trading on Friday, they dipped below $13 – or 19 per cent below the IPO price and 50 per cent below the first-day high.
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