LinkedIn, the first of the major social networks to file for an initial public offering, is absolutely killing it out of the gate - the professional networking site's share value debuted at $83 with a valuation northwards of $7 billion.
LinkedIn initially priced its shares at $45 this morning, which was the high end of its target valuation. At one point, shares were trading at $122.70. As of 1 p.m. Eastern, they had dropped to $109.49. LinkedIn's revenue grew from $78.8 million in 2008 to $243 million in 2010. In a pre-IPO filing with the Security and Exchange Commission, the company said that its revenue works in cycles by the season and does not expect to be profitable in 2011.
LinkedIn has a couple of revenue streams. It has premium subscriptions that allow users, employers and job seekers to connect and access in-depth data. It has a hiring solutions vertical where employers and employment seekers can pay to access job listings. LinkedIn also takes in revenue from advertising.
LinkedIn was incorporated in 2003 and had 14 employees and 78,000 users that year. Flash forward eight years. LinkedIn had 990 employees and 90 million users as of Dec. 31, 2010. Just three months later as it prepares for its IPO, it has hired 298 more employees and has grown 100 million users as of March 31.
According to the SEC filing, a "substantial majority" of LinkedIn's page views come from a minority of members. At the same time, most LinkedIn members do not check their pages on a monthly basis. Over the years, revenue from premium subscriptions has dropped while the revenue from hiring solutions continues to grow.
LinkedIn forecasts that its revenue will fluctuate on a quarterly basis and that it may not be profitable in the long term. According to the filing, "We expect our revenue growth rate to decline, and, as our costs increase, we may not be able to generate sufficient revenue to sustain our profitability over the long term."
LinkedIn's major stockholders pre-IPO are founder Reid Hoffman and his wife Michelle Yee with 20.1%, Sequoia Capital with 17.8%, Greylock Partners with 15.6% and Bessemer Venture Partners with 4.8%. It is trading under the symbol LNKD.Discuss