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LinkedIn? Not to the Broader Market, It Isn't.

|Includes: GOOG, Microsoft Corporation (MSFT)

Shares of LinkedIn(LNKD) closed at $94.25, almost 110% above the initial public offering.  Big deal.  At least that’s what the rest of the market said.


Companies such as these are difficult for me to value, so I typically avoid investing in them.  That’s not to say that I can’t learn anything by following them.  As analysts and pundits argued whether or not LinkedIn is worth $9 billion, I was observing the market at large.  It’s response to an IPO reminiscent of Google and Netscape, was tepid at best.  This indicates that while there was pent up demand for investor exposure to the fledgling social networking space, none of it spilled over into the rest of the market.  It was snubbed, just as soccer was by the US in the 70’s.  We knew that it was a game, but we just didn’t care about it.


In contrast, the day of Google’s IPO the DJI, S&P, and NASDAQ were up 1.11, 1.24, and 2.01 percent, respectively.  Yes, times were different.  That is the point.  Today’s lack of response by the broad market to LinkedIn’s IPO is just another indication of how tired the legs of the stock market are.  The S&P has nearly doubled in just over two years in what has been an anemic economic recovery and is setting up for a summertime correction.


As Facebook and other social networking companies reevaluate the advantages of going public in a space where there is still undoubtedly high demand, I’ll be watching.  My focus, however, will be the tides, not the storm.

Joe McCauley