Weekly Review-LinkedIn: Social Media Bubble or Next Google?

Posted: 20 May 2011 05:01 AM PDT

Yesterday was a historic day for social media companies. LinkedIn became the first social media company to go public and trade on NYSE. Although I find LinkedIn a very useful tool and believe it has some potential, the valuation is well in the bubble territory. The IPO was set at $45, but it started trading over $80 and closed just above $94. LinkedIn’s closing price gives the company a market cap of over $9 Billion, which is equivalent to over 37X revenue and over 590X earnings of 2010 (15.4Million earnings on $243Million revenue). Is this the beginning of the social media bubble or will LinkedIn be the next Google? I guess we’ll have to wait and see.

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