Jin Lee/Bloomberg News
A few months ago, LinkedIn’s market debut looked to be relatively modest. Its value on a secondary exchange had stagnated at roughly $2.5 billion.
But LinkedIn — the professional social network that is expected to begin trading this week on the New York Stock Exchange — is defying expectations. On Tuesday, the company said in a regulatory filing that it could raise as much as than $405 million. The offering, which is priced at $42 to $45 per share, values the site at $4.3 billion.
That’s a significant improvement in a short time. In early May, the company had originally set its range at $32 to $35 per share, or roughly $3 billion. Private shares of the social network recently traded at an implied valuation of $2.5 billion on SharesPost, a secondary market.
“It’s a big surprise,” said Rory Maher, an analyst with Hudson Square Research. “Thirty percent indicates that people are dying to get into this.”
LinkedIn’s improving fortunes signal the swelling demand for the Web’s most promising social media start-ups. Both Groupon and Facebook are expected to go public within the next 12 months. Groupon is said to be talking to bankers about a valuation north of $20 billion. Facebook’s last major financing round, a $1.5 billion investment led by Goldman Sachs, valued the company at $50 billion.
Although a lot of the exuberance around Facebook and Groupon has been widely discussed, a strong showing for LinkedIn on its market debut on Thursday would be a positive harbinger for Internet I.P.O.’s. According to recent report released by SecondMarket, an exchange for private shares, investors expressed the most interest in shares of Facebook, followed by Twitter, Groupon and LinkedIn in the first quarter.
“It’s a good litmus test,” Mr. Maher said. “This is a confirmation that investor demand is really strong. A combination of heavy demand and the lack of supply is really driving this.”
Of the social media giants, Groupon is expected to be next on deck. The group buying site is preparing to file a prospectus within the next two weeks, according to two people close to the company who were not authorized to speak because details of the offering are private.
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