LinkedIn share price, valuation climbing

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Professional social networking website LinkedIn, which launched in 2003 and staged its very successful IPO in late May of this year, has lately been seeing is share price and valuation rising.

The LNKD initial share price, when it debuted on the New York Stock Exchange in

May, was $45 with more than 4.8 million shares sold. But on the first day of trading, shares sold for as high as $122.69, then finished the day out at $94.25, 109 percent higher than the opening share price.

LinkedIn share price subsequently dipped to a low of $70.75 on October 4^th as the market struggled but has now climbed back up to its prior level, closing at $90.31 on October 14^th, making its market capitalization about $8.7 billion.  LinkedIn initially sold more than 4.8 million shares comprised of Class B and Class A shares – which had just 1/10^th the voting shares of Class B shares. LinkedIn’s prospectus explains as a result:

LinkedIn share price rising again

“Outstanding shares of Class B common stock will represent approximately 99.1% of the voting power of our outstanding capital stock following this offering.”

LinkedIn’s prospectus also clearly details how the company, whose website boasts over 100 million users in 200 countries around the globe, makes money – by selling its hiring and marketing solutions and “from members, acting as individuals or on behalf of their enterprise or professional organization, who subscribe to our premium services.”

Many industry observers have been expressing concern that LinkedIn is greatly overvalued, but most shareholders are not concerned, and the company’s CEO Jeff Weiner dismisses talk that the tech industry may be in for another burst bubble.

“I think folks are harking back to the nineties, but it’s different this time around. This generation of consumer web companies is totally different – many of them have been operating for years, generate real cash flow, and have built sustainable businesses”, Weiner said during a recent interview.

Seeking Alpha’s Wall Street Titan this week put together a brief analysis, comparing certain metrics of LNKD and GOOG like stock price ($90.31,  $591.68), market capitalization ($8.78B, $191B), and price to book (20.9, 3.48), and said one must conclude that either LinkedIn shares are grossly overvalued, Google shares are grossly undervalued or both.

Wall Street Titan, who seems not to have a real name but whose bio boasts a 28 year period working on Wall Street, said the end of the lock-up period on November 14^th will bring some normalcy to LNKD’s valuation:

“All of our directors and executive officers and the holders of substantially all of our securities have signed lock-up agreements under which they have agreed not to sell, transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for shares of our common stock without the prior written consent of Morgan Stanley & Co., Incorporated for a period of 180 days, subject to possible extension, under certain circumstances, after the date of this prospectus.”

Also, this week LinkedIn announced that it will disclose its third quarter 2011 financial results and business forecast in a conference call on November 3^rd, 2011.  The webcast will be available for viewing at http://investors.linkedin.com/  CEO Jeff Weiner and CFO Steve Sordello will host the webcast.