THE DAY LINKEDIN BECAME A PUBLIC COMPANY
LinkedIn Corporation, the world's largest network for business professionals on the internet, held its initial public offering (IPO) on the New York Stock Exchange, the Mecca of extreme capitalism, with an asking price of $45.00.
Investor's, stakeholders, employees, traders and loyal LinkedIn users waited with nervous anticipation, excitement and sweaty palms for the opening bell to ring. It didn't take long to see that LinkedIn (NYSE:LNKD), would be the darling of Wall Street.
The market trading day did not start off with a ringing bell, or a cannon blast, but with the furry and sound of a NASA Space Shuttle launch, and we all know how loud that is. LNKD shares were the precious cargo of today's rocket launch, and once that cargo got into space orbit, that's when the fun began.
WHAT IT WAS LIKE THE MOMENT OF THE LINKEDIN IPO
What was it like on the day of LinkedIn's historic initial public offering? I wasn't there, so I cannot put it into words, but judging from the following Financial Times video and several pictures, it was a very happy and special moment for the founder's, investors and exeuctives of LinkedIn. I compare it to graduating from college or getting a divorce.
Check out the video:
Click to View
Check out the pictures of these happy LinkedIn executives:
THE FEEDING FRENZY BEGINS
The trading day began with LNKD opening $45.00 per share, but investor's were so bullish and eager to get their hands on LNKD shares that the bidding leaped to $83.20 per share, or 44.30% over its asking price.
I could not believe it, if I had not seen it. I think everybody got a powerful jolt of rocket ship blastoff euphoria. I misstook the increase in the bid price over the original asking price of 44.30% for price of the stock, and thought the price had dropped. It took me a few minutes to realize that LNKD share prices were increasing with the speed of splitting cancer cells.
The trading spectacle became an uncontrollable and unquenchable feeding frenzy, like piranha's fighting over a piece of animal meat. Investor's were competing, or more like fighting their way through a ravenous crwod, eager to become the first investor to buy LNKD stock. If that attempt failed every successive buyer tried outbidding the next buyer, so they could exclaim, "Neener, neener, neener. Take than punk, I outbid you, so there. heeehawww!!"
TRADING DAY BLOW-BY-BLOW
This feeding frenzy continued unabated from 9:30 a.m. until LNKD shares peaked at 122.70 at 11:50 a.m. (EST). This is a quck blow-by-blow of the highlights and lowlights from the opening bell until the close of the trading day:
- 9:30 a.m. - $83.2o (opening bid)
- 11:50 a.m. - 122.70 (peak for the day)
- 11:58 a.m. - 102.00 (everybody on Twitter thought that LNKD had tanked, but this was not to be the case.
- 12:20 p.m. - 111.88 (LNKD rallies)
- 12:58 p.m. - 103.00 (LNKD takes another dip, but then a second rally beings and it flatlines for 2.5 hours )
- 2:28 p.m. - 107.85 (LNKD regains half of its lost since 12:20 p.m. then appears to talk over next half hour)
- 3:02 p.m - 94.47 (LNKD price dropped by 13.38 points then the hemmoraging stops)
- 3:54 p.m. - 91.38 (LNKD goes up and down a couple of more times before dropping 3.09 points)
- 4:00 p.m. - 94.25 (LNKD ends the trading day up 49.25 points, an increase of 109.44% from its opening bell asking price)
Below is a graph showing what LNKD share prices looked like throughout the trading day:
COMMENTARY: The last time I followed an IPO, it was the one for Google. That IPO was a lot more controlled, and basically uneventful. Very easy peezy. LinkedIn on the other hand, came right out of the gate with an intensity and explosiveness that may not never be matched again.
The IPO offering price was set at $45.00 per share, but within seconds after the opening of trading, the amount bidded went to $83.20 per share. That's an instant real profit of $43.2o per share to the underwriters. That opening price demonstrates the power of press hype and investor euphoria surrounding LinkedIn's IPO. I couldn't believe it myself, but within seconds after the opening, a former senior trader for Morgan Stanley, texted me, and that's when I started to take interest.
Most active IPO's typically increase in value by 10% to 30% after the opening bell, but LinkedIn's first day as a publicly-traded company was something to behold. The stock peaked at $122.70 near noon, setled down a bit, finally closing at $94.25, with a market cap of $8.9 billion, and trading volume of 30.15 milliion shares. In price along, LinkedIn increase in value by 209% from the $45.00 per share IPO offering price. Not too shabby, but is LinkedIn's stock over-priced? We'll hear what others are saying and analyze the first day valuation in greater detail.
Click this link to read Part 4 - Inside The LinkedIn IPO: The Road To 100 Million Professionals
Click this link to read Part 6 - Inside The LinkedIn IPO: Who Got Rich
Courtesy of the New York Stock Exchange, Google Finance and an article dated May 20, 2011 appearing in SAI Business Insider
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