LinkedIn, Groupon, and Facebook: The Great American Social Media IPOs

by Derek Loosvelt | May 17, 2011

LinkedIn's in the batter's box, digging its cleats in the dirt. Groupon's on deck, feeling strong. And Facebook's in the hole, looking to swing for the bleachers -- if not send a dinger over the roof of the stadium.

manny ramirezYes, the big three American social media firms are all about to go public. And first up is LinkedIn, which will unveil its IPO later this week and which, earlier today, revealed that its share price will be a lot higher than expected: 30 percent higher. The reason for this is so many investors want a piece of the firm; in fact, the IPO is so sought after that LinkedIn's now getting a valuation of $4.3 billion, as compared with just $2.5 billion a few months ago.

What this means is a bigger than expected payday for LinkedIn's management and other stakeholders in the firm, as well as a bigger payday for the banks leading LinkedIn's IPO (J.P. Morgan, Morgan Stanley and BofA). It also means that the equity holders and underwriters who will be involved in Groupon's and Facebook's forthcoming IPOs will receive higher than expected paydays (yes, that includes everybody's favorite vampire squid/Wall Street punching bag as well).

Given LinkedIn's new, higher valuation, it's likely that Groupon will be valued north of its recent $20 billion valuation, and that Facebook, whose enterprise value has been placed at somewhere between $40 billion and "all the money in the world" in recent months, will likely end up being worth somehwere between $50 billion and $100 billion, at least.

Which could have many analysts crying foul. Or, worse, bubble.

(WSJ: LinkedIn Hikes IPO Price Range by 30%)

(DealBook: LinkedIn Rockets to $4 Billion Valuation)

(Related: LinkedIn, Not Facebook, Prepares for IPO)

Filed Under: Finance | Technology


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