Stock Trading

Company Background

•LinkedIn started out in the living room of co-founder Reid Hoffman in 2002.
•The site officially launched on May 5, 2003. At the end of the first month in operation, LinkedIn had a total of 4,500 members in the network.
•Roughly one million new members join LinkedIn every week, at a rate equivalent to a professional joining the site faster than one member per second.
•The company is privately held and has a diversified business model with revenues coming from user subscriptions, advertising sales and hiring solutions.

LinkedIn Facts

•LinkedIn operates the world’s largest professional network on the Internet with more than 100 million members in over 200 countries and territories.
•More than half of LinkedIn members are currently located outside of the United States.
•There were nearly two billion people searches on LinkedIn in 2010.
•Headquartered in Mountain View, Calif., LinkedIn also has U.S. offices in San Francisco, Chicago, New York and Omaha, Neb. International LinkedIn offices are located in Amsterdam, Dublin, London, Paris, Sydney, Toronto and Mumbai, India.
•The company’s management team is comprised of seasoned executives from companies like Yahoo!, Google, Microsoft, TiVo, PayPal and Electronic Arts. The CEO of LinkedIn is Jeff Weiner.
•LinkedIn is currently available in six languages: English, French, German, Italian, Portuguese and Spanish.
•LinkedIn started off 2011 with about 1,000 full-time employees located all around the globe, up from around 500 at the beginning of 2010.


Worldwide Membership

•100m+ professionals around the world as of March 2011
•20m+ members in Europe as of December 2010
•5m+ members in the UK as of December 2010
•1m+ members in France
•2m+ members in the Netherlands
•1m+ members in Italy
•1m+ members in the DACH region (Germany, Austria and Switzerland)
•1m+ members in Spain
•9m+ members in India
•3m+ members in Canada
•3m+ members in Brazil
•2m+ members in Australia
•As of April 2011, LinkedIn counts more than 11 million recent college graduates* around the world as members (*LinkedIn defines recent graduates as members who have graduated within the last five years--between 2005 and 2010.).

LinkedIn and Business

•As of January 2011, LinkedIn counts executives from all 2010 Fortune 500 companies as members; its hiring solutions were used by 73 of the Fortune 100 companies as of March 22, 2011.
•More than 2 million companies have LinkedIn Company Pages.
•LinkedIn represents a valuable demographic for marketers with an affluent & influential membership.
•Thousands of developers are using LinkedIn APIs to create innovative tools and services for professionals.

Shares of professional networking venue LinkedIn (LNKD) have doubled this morning on their debut, rising $42.70 to $87.70, after dropping sharply after the open and steadily working their way back up.

As I noted last night, the offering had priced above an expected range of $42 to $45, and the shares are way, way above a recent price of $30.79 at which the stock changed hands in private secondary markets such as Sharespost.

Unfortunately, it’s hard to gauge the immediate impact on the private markets. That’s because trading is thin in Sharespost, and in SecondMarket, the other prominent private-share exchange. For example, the latest bid and ask listed for Facebook on Sharespost today is from May 15th, showing a modest increase to $35 from the prior $32 a couple weeks earlier.

LinkedIn Chief Executive Jeff Weiner is not concerned about the current high valuation of his company, he told CNBC Thursday.

The initial public offering opened Thursday at $83, valuing LinkedIn [LNKD 101.02 56.02 (+124.49%) ] at $8 billion. The stock price was nearly double the original price of $45 a share.

"We leave the valuation to the good folks at CNBC, the marketplace, etc.," he told CNBC. "We're going to continue to focus on the plan. The better we execute, the more likely the fundamentals will take care of themselves."



He would not comment on whether the business social networking company, with 100 million members, was initially undervalued or whether it is now overvalued.

You can't draw any conclusions on the company's valuation based on the the open, he added.

Interest in the stock was so great on the floor of the New York Stock Exchange the first trade, by Weiner, could not take place until about 30 minutes after the market open.

"At the end of the day it’s not about the share price today, it’s about us continuing to execute on the long-term plan," the LinkedIn CEO said.

Expect more social networking company IPOs, he said. "I think these social platforms are here to stay. The fundamentals of this group of companies are very different from what we saw in the 1990s" during the Internet bubble.

LinkedIn mania has evoked memories of another era, the dot-com bubble.

That Internet craze kicked off in 1995 when a small, profit-less company in Silicon Valley came to market with a shockingly strong initial public offering. The company? Netscape Communications.

My former colleague Molly Baker captured the moment perfectly with her Aug. 10, 1995 dispatch:

“It took General Dynamics Corp. 43 years to become a corporation worth today’s $2.7 billion in the stock market. It took Netscape Communications Corp. about a minute.

That’s the value investors were putting on Netscape yesterday after the software company’s first public shares started changing hands among technology-crazed investors. Never mind that the firm had only $16.6 million of revenue in the first half of this year and has never earned a profit. Or that its main product is one that’s given away free on the Internet.

Having been priced at $28 a share Tuesday — a figure that had already been doubled from what was planned a few weeks ago — Netscape opened trading an hour and a half late yesterday at a breathtaking $71 a share. That times the 38.1 million shares in existence yielded the stunning “market cap.”

Netscape, of course, barely exists today, its once-popular browser crushed by Microsoft’s Internet Explorer.

Indeed, many of the company’s that followed in Netscape’s trailblazing IPO path shared Netscape’s fate such as theglobe.com, Webvan and Pets.com. But there were certainly big winners and survivors, including Amazon.com, Yahoo! And eBay.

So LinkedIn.com is coming public and holy cow is the mainstream media hyping the heck out of it. Every major news outlet is breathlessly explaining how the IPO was originally priced in the low $30s last week, then upped to the mid $40s earlier this week and how it priced at the highest end of that range last night. And now it’s opening up trading at $80 plus per share today. And every single article, new commentator and/or pundit immediately then starts debating whether this frenzied example of the barrage of IPOs hitting the market is indicative of a new bubble.

Since DJIA 8k or so, a couple years ago, I’ve been predicting that we were finally about to enter what I have long called an “echo tech-o bubble”. The idea was that as a result of the Fed’s easy money policies, fiscal spending binges in the name of stimuli, and a new tech spending boom fueled by apps, smartphones, tablets and clouds, would all combine to push us into a new tech stock market bubble.

The DJIA is up some 50% since I’ve started investing my time, money and reputation on this coming echo tech-o bubble, and many of the stocks I’ve been highlighting as the best plays on this revolution are up double and triple over the same time period.

Last year, I often wrote that 2010 was probably setting us up a lot like 1997 or 1998 did, when the tech IPO boom really started kicking in and the Fed’s free money policies out of fear of a downturn and then a potential Y2K disaster funneled huge money into companies coffers. When all those early IPOs started popping and making investors think they were gonna be rich beyond their wildest dreams, (think LinkedIn today and RenRen last week) and all that money that all those companies raised started being thrown around on new technologies, new servers, new software, new websites, new apps…well, we did eventually enter a bubble.

Get my new eBook, “30 Stocks for the Cloud Revolution”, by visiting CloudRevolutionStocks.com or by subscribing to TradingWithCody.com, where you get access to all my investment books for free.

It was four years after and 300% move later in the Nasdaq from the time idiots like Alan Greenspan (think of the pundits warning you of a new tech bubble already existing right now) were warning people in 1996 that stocks had entered a period of “irrational exuberance”. Of course by the top of the bubble, Alan had reversed himself and argued that there was no tech stock market bubble.

A few weeks ago when Chinese social network site RenRen had its IPO, I wrote an article about how I wouldn’t touch it with a ten foot pole, but that there were some great investment opportunities arising from such IPOs anyway. And it’s the same dynamic today with LinkedIn.com, which while I’m not going to chase at $80 a share the day it comes public, is a great company and in coming years will probably grow into this $8 billion valuation the market is now giving it.

But the best way, the only way, to really profit on the scores of companies coming public this summer is to buy the companies that sells them the technological picks and shovels of the 21st century. That means sticking with stocks like Adtran and Riverbed.

I first started flagging Adtran for subscribers back when it was almost exactly half of the price it is right now. The stock has come down from $47 a couple months ago and has been trading in the very high $30s to the low $40s since. The company is scrambling to meet demand from carriers who are scrambling to meet demand from wireless customers who demand much more bandwidth than they can currently get.

Adtran’s been trading a bit like a lesser volatile version of Riverbed, which I first started flagging for readers when it was 1/3 today’s price and which is also scrambling to meet demand from customers who are scrambling tom meet demand from enterprise customers who demand much more bandwidth than they can currently get in their private networks.

To find out how I’m trading these stocks and what options I’m using to maximize my profits, please check out TradingWithCody.com, where I detail all the trades in my personal account in real time and where you also get access to all five of my investment books, including the brand new “30 Stocks for the Cloud Revolution” for free.

At time of publication, Willard, author of Revolution Investing and Trading With Cody, was net long Adtran and Riverbed of the stocks mentioned in this column although positions can change at any time. None of the information in this column constitutes a recommendation by Willard of any particular security or that any security or trading strategy is suitable for any specific person.

Social-media companies, take note: LinkedIn Corp.'s swift rise on its first day of trading Thursday proves that U.S. investors are hungry for similar stories.

LinkedIn's stock topped $90 a share, double its $45 IPO price, as the professional networking site began trading on the New York Stock Exchange. WSJ's Dave Kansas, SmartMoney's Jack Hough & MarketWatch's Ben Pimentel discuss.
.The professional-networking site's shares opened at $83 on the New York Stock Exchange, up 84% from its initial public offering price of $45. It was recently changing hands at $85.99 a share, up 91%, valuing the company at more than $8 billion.

LinkedIn's IPO had priced at the high end of its expected $42 to $45 range, which was boosted by $10 earlier this week in the face of strong demand.

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..The offering of 7.84 million shares—the biggest U.S. Internet IPO since Google Inc., analysts say—has been a controversial one, as many across Silicon Valley and Wall Street say that investors are being taken in by a new Internet bubble. But none of that deterred investors, who gobbled up shares of an offering led by Morgan Stanley, Bank of America-Merrill Lynch and J.P. Morgan Chase & Co.

LinkedIn is one of the best-known sites for career networking and recruitment, and its IPO launch provided investors with their first glimpse of what might lie ahead for other social Internet sites such as Facebook Inc. or Groupon Inc. Both companies, along with Twitter Inc. and Zynga Inc., have attracted a frenzy of attention from venture capitalists and well-connected individuals, who have been driving their valuations up in private financing rounds. Though none have registered to go public, hopes are running high that they will in 2011 or 2012.

As the first major U.S. social networking company to go public, LinkedIn's deal is viewed as a preview of sorts for those that remain private, with expectations that a name like Facebook will be in even greater demand. LinkedIn has more than 100 million members, a fraction of the 600 million plus that Facebook has attracted, and its job-networking function is considered less a part of its members' daily life than Facebook's broader role as constant source of updates on the lives of friends, family and romantic partners.

"In Silicon Valley, everyone wants this to be a success. More success means there will be more investments in new companies," said attorney Victor Shum, a partner in the San Francisco offices of Jeffer, Mangels Butler & Mitchell who advises technology firms on financing, mergers and acquisitions, and other business transactions. "If it works, there's going to be a big push from a lot of social media companies to try to get out before Facebook does. Because once Facebook comes out, they're not going to be able to get any analyst attention."

As on Facebook, anyone can post their profile on LinkedIn and search for others' free. But that's where the similarities end: LinkedIn is strictly professional, with job-hunters, hiring managers and their colleagues making business connections. That narrow focus means that its members generally fit a more affluent, well-educated profile.

That's definitely an asset for its business model; the company makes its money by charging businesses fees to recruit and advertise; it also sells premium subscriptions to members.

In 2010, revenue at LinkedIn doubled to $243 million and net income was $15.4 million, compared with a loss of $4 million a year earlier. In the first quarter of 2011, revenue also doubled to $94 million and net income rose 14% to $2.1 million from a year earlier.

The company expects its revenue growth rate to slow and warns that it won't be profitable in 2011 as it invests in what it calls future growth, such as technology and product development. It also warns that it expects that its results in the future could become more cyclical and seasonal.

LinkedIn is the only company scheduled to go public in the U.S. this week. A second offering, from biotech Advanced BioHealing Inc., didn't materialize after Irish biopharmaceutical firm Shire PLC instead acquired it Tuesday.

Shares of Baidu (NASDAQ: BIDU - News), China's largest provider of Internet search services, are trading higher by 2% after the company, along with its home government, were sued by eight New York residents on Wednesday that allege Baidu is working with Chinese policymakers to block free speech in the country. China is the world's largest Internet market.

The eight pro-democracy activists claim violations of the U.S. Constitution and, according to the plaintiffs' lawyer, the suit is the first of its type, Retuters reported. News of the litigation doesn't appear to be having much of an impact on the Chinese Internet Stocks Index, which is up 1.6%. It's more likely that the massive success of today's LinkedIn (NYSE: LNKD - News) IPO is lifting internet stocks across the board.

The lawsuit against Baidu seeks monetary damages in the amount of $16 million, but does not look to alter Baidu's policies. Google (NASDAQ: GOOG - News), the largest U.S. Internet search provider, has run into censorship issues in China and has had a longstanding rift with Beijing over the issue. Last year, Google shut down its Chinese search engine and began directing users to its Hong Kong site after a censorship argument with Beijing. The company has subsequently lost market share to Baidu.

China keeps a tight grip on what Web sites its residents can and cannot access within the country. For example, Facebook, Twitter and YouTube are all blocked in China.

Speaking of Facebook, shares of Renren (NYSE: RENN - News), China's equivalent of the social networking giant, are up 3% today, while Sohu.com (NASDAQ: SOHU - News) is up 1%. SINA (NASDAQ: SINA - News) is higher by 4% as is Youku.com (NYSE: YOKU - News).

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LNKD todays hot stock play was alerted in our live stock chat room earlier this morning by some of our large cap players. Congrats to all who got in on this monster and good luck. Join us in the chat room for more on LNKD as well as many other great plays at the link below.
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LNKD Linkedin corporation Update Currently trading at 107.00 with the hod of $122.70 and the lod of $80.00 What a monster play.