January 06, 2011, 4:21 PM — While much of the investing world has been busy discussing whether Facebook will ever go public, LinkedIn, the social networking site for professionals, has been setting the stage for its own IPO, perhaps as soon as this quarter.
(Also see: Not everyone loves Facebook as an investment)
From the Los Angeles Times:
LinkedIn has hired Bank of America Merrill Lynch, Morgan Stanley and JPMorgan Chase to advise it after a round of interviews in November. The size of the offering is not known, but it's expected to be small relative to the company's valuation. LinkedIn's implied valuation on the private trading marketplace SharesPost is $2.2 billion.
That valuation pales compared to social networking leader Facebook's implied value of $50 billion. But investors must work with the prospective IPOs they have, not the ones they wish they could have.
For LinkedIn, an IPO now makes sense because social networking's big gorilla, Facebook, reportedly isn't planning a public offering until at least 2012. It's likely that the past week's stories about the heated market for shares in private technology companies -- notably Facebook and Twitter -- exacerbated the pent-up demand for social networking IPOs. Why not ride the wave?
Whether LinkedIn is a good investment remains to be seen. We have to wait for the filing to evaluate its growth strategy, risks and financial details. But the company reportedly is profitable and generated $200 million in revenue, according to the Times. It has 85 million users and sells premium services as well as advertising.
Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.