LinkedIn Likely to Price At $45 A Share, At the Top of A Boosted Price Range

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LinkedIn

As reported by Wall Street Journal’s Stu Woo:

LinkedIn Corp.’s IPO is likely to price at $45 Wednesday evening, at the top of a boosted price range, according to a person familiar with the deal.

Demand has been running high this week for the stock, which is scheduled to begin trading Thursday on the New York Stock Exchange under the symbol LNKD. The company had raised its price range Tuesday to $42 to $45 a share, a $10 increase.

The lofty valuation for what is shaping up to be one of the most anticipated Silicon Valley initial public offerings in recent years has met with mixed reactions on Wall Street.

At first glance, LinkedIn’s financials don’t appear to easily justify a more than $4 billion valuation. The company—which lets people post résumés and exchange information with friends, colleagues, business contacts and recruiters—earned just $15.4 million last year on $243 million in revenue. It has said in its regulatory filings that it expects its revenue growth rate to slow and warns that it won’t be profitable in 2011 as it invests in technology and product development.

But LinkedIn has a fast-growing membership base of more than 100 million subscribers and three diversified revenue streams: online advertisements sold to businesses; premium subscriptions for individuals; and hiring tools sold to recruiters.

“They have three solid revenue streams,” that is “really a good sign,” said analyst Debra Aho Williamson of eMarketer.

How the IPO performs—and whether LinkedIn can justify a seemingly lofty valuation—has implications for Silicon Valley and the broader Web industry. LinkedIn is one of the first social-media companies to go public, leading a wave of expected IPOs from other Web companies such as Facebook Inc. and Groupon Inc. LinkedIn’s offering gives the tech industry a gauge of how receptive the market is to these new social-oriented businesses.

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