$175 Million: The Money LinkedIn Left On The Table

May 21, 2011 3:29 pm

OK, this is standard practice, the underwriters would allocate IPO stock as a favor to big clients so they could enjoy the first day pop etc.

Henry Blodget’s question summarizes the LinkedIn IPO:

” Imagine if the trusted real-estate agent you hired to sell your house persuaded you to sell it to her best client for $1,000,000 by telling you this was the best price she could get. And then, the next morning, the person who bought your house immediately turned around and sold it for $2,000,000 (using the agent to sell it, naturally).”

ok, you pay 28 Million dollars to a group of extremely smart to people to get one thing right: the price. And they get it wrong, by pricing it at a 50 percent discount. Who takes the blame?

“If LinkedIn can sustain a price above, say, $75 a share, BOFA and Morgan should have sold it to institutions at $60. Because the stock was instead sold at $45, LinkedIn and its existing investors just got screwed to the tune of $175 million.”

Read more: http://www.businessinsider.com/linked-in-ipo-2011-5-b#ixzz1N07FuRLO

LinkedIn should take the blame. Its not enough if you want to be the next Google. You should act like one.

(We do note that SecondMarket valuations could have possibly misled LinkedIn on this one. Still.)

For Interesting Statistics Everyday, Find Statspotting on Facebook and Follow Statspotting on Twitter

Leave a Reply