The valuation of social networks has always been a tricky subject. Facebook, Twitter, Foursquare, LinkedIn and others have been valued very highly at certain times, even though some aren’t yet profitable, and many not even have any revenue.
However, this morning LinkedIn officially IPO’d at $45 a share, and the stock price immediately shot up to over $100 per share (as I write this, it’s hovering around $110). While this gigantic share price leap is agonizing for shareholders that sold stock at $45, Facebook has to be watching this occur with a giant smile.
As the big dog in the social media world, Facebook not only is a stable of today’s life, but a very profitable company at this point. They’ve figured out how to turn their massive amount of data and information into a growing revenue stream and attract advertisers that want to directly reach their target audience. When (someday) Mark Zuckerberg and company decide it is time to IPO, they know with absolute certainty that their stock price is going to go through the roof, and will be one of the most highly anticipated IPOs in history.