LinkedIn dazzled investors with its debut on the New York Stock Exchange, but are the company's shares really worth the hype?
The social media networking company launched its initial public offering (IPO) last week and its shares immediately soared more than 100 per cent.
At one point the stock was hovering at US$120 a share, which is about 160 per cent above the IPO offer of $45 a share. The company was briefly valued at more than $8 billion.
The price has settled to just below $100 but LinkedIn is still trading at a valuation of almost 300 times price to earnings.
The site has about 100 million members, and is popular worldwide. It undoubtedly has potential but the issue is whether the business model justifies the steep valuation.
Concerns have been raised that LinkedIn's heady rise was reminiscent of the late 1990s dot-com bubble.
The company does have a revenue model and it is growing rapidly. It allows users to create free profiles or pay a subscription fee for a premium account with special features, and it also makes money charging businesses and recruiters who use it for hiring staff.
LinkedIn has benefited from investors' infatuation with social media.
The social buying site Groupon raised $1bn from investors in January and is reported to be considering an offering that could value the company at $20bn. Facebook is also widely expected to go public next year.
But media analysts have said a revenue model that partly relies on advertising exposes LinkedIn to heavy online competition. The company also seems to have some of the characteristics online users find annoying. As one media analyst at a New York investment bank put it: "Policing is a problem - you get approached from [recruiters] constantly and they bug you with stuff that's not necessarily relevant."
That's a sure way to lose core users, not gain the millions more a multibillion-dollar valuation assumes the site will attract.
fhalime@thenational.ae
The bio
Studied up to grade 12 in Vatanappally, a village in India’s southern Thrissur district
Was a middle distance state athletics champion in school
Enjoys driving to Fujairah and Ras Al Khaimah with family
His dream is to continue working as a social worker and help people
Has seven diaries in which he has jotted down notes about his work and money he earned
Keeps the diaries in his car to remember his journey in the Emirates
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Charlotte Gainsbourg
Rest
(Because Music)
Quick pearls of wisdom
Focus on gratitude: And do so deeply, he says. “Think of one to three things a day that you’re grateful for. It needs to be specific, too, don’t just say ‘air.’ Really think about it. If you’re grateful for, say, what your parents have done for you, that will motivate you to do more for the world.”
Know how to fight: Shetty married his wife, Radhi, three years ago (he met her in a meditation class before he went off and became a monk). He says they’ve had to learn to respect each other’s “fighting styles” – he’s a talk it-out-immediately person, while she needs space to think. “When you’re having an argument, remember, it’s not you against each other. It’s both of you against the problem. When you win, they lose. If you’re on a team you have to win together.”
2019 Asian Cup final
Japan v Qatar
Friday, 6pm
Zayed Sports City Stadium, Abu Dhabi
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More from Neighbourhood Watch:
THE BIO
Born: Mukalla, Yemen, 1979
Education: UAE University, Al Ain
Family: Married with two daughters: Asayel, 7, and Sara, 6
Favourite piece of music: Horse Dance by Naseer Shamma
Favourite book: Science and geology
Favourite place to travel to: Washington DC
Best advice you’ve ever been given: If you have a dream, you have to believe it, then you will see it.
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
FIXTURES
Monday, January 28
Iran v Japan, Hazza bin Zayed Stadium (6pm)
Tuesday, January 29
UAEv Qatar, Mohamed Bin Zayed Stadium (6pm)
Friday, February 1
Final, Zayed Sports City Stadium (6pm)
