On Tuesday, news broke that LinkedIn had raised its pre-IPO price range, a move that drew no shortage of attention and raised eyebrows among avid market watchers already curious to see how Thursday’s LinkedIn IPO will turn out.
This morning, I had an opportunity to connect with Lee Simmons, editor of Hoovers, an IPO research service.
When asked if social media and its various genre titans will continue to have an impact on Wall Street, Simmons offered insight as to whether or not we’re entering a new social media bubble.
“My suspicion is that valuations like the kind we’re seeing with LinkedIn will eventually even out over the course of the year as more social media firms file to go public,” Simmons tells Mobile Marketing Watch.
“The very largest companies will make the biggest splash for the foreseeable future (or fall fastest, depending on their timing and investor sentiment),” he added. “That said, social media isn’t going away anytime soon, and as long as investors continue to exhibit this kind of pent-up demand for tech stocks, the industry will enjoy solid public market debuts.”
Yesterday, in a blog post on Bizmology, Simmons didn’t chalk up the LinkedIn pre-IPO price range bump to anything other than masterful public relations and understandable investor interest.
“Perhaps all that the price bump really indicates is that LinkedIn has done a good job with its roadshow and that investors believe this is a stock that really is worth it,” Simmons wrote.
“It’s a rather simplistic observation, and price bumps such as these do reflect a significant amount of speculation on future market opportunities, as opposed to current business performance. To be fair, LinkedIn’s new offering price should give potential investors some pause, if only to look closer at tech stocks in general. Youku.com, China’s answer to YouTube, closed 161 percent above its offering price on its first day of trading in 2010 and remains the third-best performing IPO over the past 12 months, according to the Hoover’s IPO Scorecard. In fact, four of the top-10 best performing stocks are tech-related; likewise, four of the top-10 best-returning stocks are, again, technology companies.”
