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Brett Arends' ROI
May 19, 2011, 2:14 p.m. EDT
By Brett Arends, MarketWatch
BOSTON (MarketWatch) "” Quit your job.
You heard me. Quit your job, move to Silicon Valley, and start a venture to compete with LinkedIn /quotes/comstock/13*!lnkd LNKD +109.44% .
LinkedIn's stock tops $100 a share, more than double its $45 IPO price, as the networking site opens for trading on the NYSE.
News from the initial public offering shows Wall Street is handing out free money again for dot-coms, and who knows how long it's going to last?
LinkedIn more than doubled on its stock-market debut, rising from $45 a share to $105 by early afternoon. That values the company at $10 billion.
That's equivalent to $130 for each of this company's 75 million monthly users. Hmmm. How long before a competitor offers the members, oh, $120 each to move? It won't even cost a penny. The new company can give the new members $120 ... in stock!
You think I'm kidding, but somewhere in an old email I still have a record of all the stock I "owned" in a free Web service that started up in London during the last dot-com bubble. The more I used it, the more "stock" I got. The IPO was going to make everyone rich.
LinkedIn, despite the hype, is primarily a service for hosting résumés. You can call it "networking" and "social media" and whatever you like, but half the company's revenues come from recruiters looking to trawl through all the résumés on the site.
How exciting is that? Last quarter, those revenues from recruiters came to $46.3 million.
That's 21 cents per LinkedIn user per month. Yes, you can see why this stock is being valued at $10 billion, can't you?
Another $28 million came from advertising. That's another 12 cents per user per month. Wow.
Online advertising. What a great business model.
This week's reaction to the LinkedIn IPO suggests the new dot-com mania may have some way to run. There's still a lot of skepticism about the Web out there, and that's bullish. Lots of people who "just don't get it." The new economy. The new world. Web 2.0. Web 3.0. It's not about earnings; it's about eyeballs!
Bubbles typically don't burst till the last bear turns bullish. The collapse of the last dot-com bubble was signaled weeks in advance, when the IPOs stopped popping on their debuts.
Cash in while you can. Resume-site.com? Resume-world.com? Resumeszone.com? GoDaddy says these domain names are all free, for just $12 a month. Or pick some goofy name out of a hat. But make sure to get out in time.
"How to cash in on LinkedIn http://on.mktw.net/joT2Ue" 1:26 p.m. EDT, May 19, 2011 from MKTWArends
"Strauss-Kahn? Here's the real IMF scandal http://on.mktw.net/lbGjhF" 12:27 a.m. EDT, May 18, 2011 from MKTWArends
"Why I won't invest in hedge funds http://on.mktw.net/iSpOwG" 11:50 p.m. EDT, May 16, 2011 from MKTWArends
"What your broker won't tell you about LinkedIn http://on.mktw.net/lO1hQ9" 4:12 a.m. EDT, May 11, 2011 from MKTWArends
"Housing crash is getting worse http://on.mktw.net/lzkb8O" 11:11 p.m. EDT, May 8, 2011 from MKTWArends
Brett Arends is an award-winning financial columnist with many years experience writing about markets, economics and personal finance in Europe and the U.S. He has received an individual award from the Society of American Business Editors and Writers for his financial writing, and was part of the Boston Herald team that won two others. He was educated at Cambridge and Oxford Universities, and has worked as an analyst at McKinsey & Co. He is a Chartered Financial Consultant (ChFC) and Accredited Asset Management Specialist (AAMS). His latest book, "Storm Proof Your Money," has just been published by John Wiley & Co.
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