Was LinkedIn Scammed? (Wall Street rigging the game for the umpteenth time)

[Blue_Tires]

If there’s one thing we’ve all learned in the aftermath of the financial crisis, it’s that stiffing your client is not a crime. Not if you’re an investment bank.

On Thursday, LinkedIn, an Internet company that connects business professionals, became the first major American social media company to go public. The company had hired Morgan Stanley and Bank of America’s Merrill Lynch division to manage the I.P.O. process. After gauging market demand — which is what they’re paid to do — the investment bankers priced the shares at $45. The 7.84 million shares it sold raised $352 million for the company. For this, the bankers were paid 7 percent of the deal as their fee.

For a small company with less than $16 million in profits last year, $352 million in the bank sounds pretty wonderful, doesn’t it? But it really wasn’t wonderful at all. When LinkedIn’s shares started trading on the New York Stock Exchange, they opened not at $45, or anywhere near it. The opening price was $83 a share, some 84 percent higher than the I.P.O. price. By the time the clock had struck noon, the stock had vaulted to more than $120 a share, before settling down to $94.25 at the market’s close. The first-day gain was close to 110 percent.

I have no doubt that most everyone at LinkedIn was thrilled to see the run-up; most executives at start-ups usually are. An I.P.O. is an important marker for any company. And, of course, the executives themselves are suddenly rich. But, in reality, LinkedIn was scammed by its bankers.

http://www.nytimes.com/2011/05/21/opinion/21nocera.html?src=ISMR_AP_LO_MST_FB

[sfwriter]

1. We also have a bubble bubble...

...too much loose cash doing nothing productive. The run-up was inevitable. Every "new thing" and waves in commodities will be the rage until actual production looks profitable again, or we tax the shit out of this nonsense and drive the money back into businesses.

[customerserviceguy]

2. Anybody who loses money in this thing

has no one other than themselves to blame. Back before the dot-com bust, we had things that were called 'vaporware'. A social networking site that is for people who think they're too good for Facebook is 21st Century vaporware.