Did LinkedIn really double in value and what does this mean for social media?

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By Rachel Smith
on 20/5/11

Yesterday the professional network, LinkedIn, was the first US social network site to float on the stock exchange opening at $83 per share, 84% higher than the initial offering price of $45.

LinkedIn share prices peaked at $122 and closed at $94. This valued LinkedIn at around $9bn, over double the initial price tag of $4.3bn.

So what does this mean for social media?

Firstly, I don’t believe the value of LinkedIn really doubled in a day, this is more likely to be an indication of investors desire to get hold of social media, with it being the first major social network to join the stock exchange.

The other key players including Facebook and Twitter are currently privately owned and seeing more and more pressure to go public. So the naïve would think surely after seeing LinkedIn double in value over night, every man and his dog in social media would want to jump on the bandwagon.

Although this could see a quick win, the longer story wouldn’t be so clear. When going public any business will get less and less control over the business plan. Facebook needs the control and that is what brought them to where they are now, like when they held back from using ads even though they were showing no return.

While I’m not too sure what will make the right time for twitter, I believe the development of social e-commerce will put Facebook one step closer to the stock market.

Although Facebook and Twitter will be keeping an eye on LinkedIn shares as a preview of social media on the stock exchange, I can’t see them rushing to go public themselves any time soon, and if and when they do there will be some bigger stories than the LinkedIn price increase yesterday.