(LinkedIn IPO) Stock rises 109% on 1st trading day

James Ryan Jonas

LinkedIn IPOLinkedIn, a social networking site for professionals, went public yesterday and, at the end of its first trading day, the stock registered a 109% increase over its initial public offering (IPO) price.

The company’s stock (LNKD) closed at $94.25 on its first trading day, up 109% over the IPO issuance price of $45. It reached a high of $122.70, a 173% increase.

The current stock price brings the company’s valuation to $9 billion.

In contrast, iPod and iPad maker Apple Inc. is valued at $334 billion, making it the largest tech company in the US. Microsoft‘s market capitalization is $224 billion while Google is valued at $199 billion. (See also: Apple, not Microsoft, is largest US tech company)

The LinkedIn IPO is said to pave the way for other internet companies such as Facebook, Zynga, and Twitter to go public soon. The value of Facebook, the largest social networking site in the world, is estimated to be around $50 billion.

Winners from the IPO include executive and co-founder Reid Hoffman, whose stake in the company is now worth $1.8 billion, and venture capital firms Sequoia Capital and Greylock Partners, whose investment in the company are now valued at $1.6 billion and $1.36 billion, respectively.

Critics say, however, that the price surge is reminiscent of the “dot com” boom in the late ’90s. Doomsayers cite the performance of internet companies that earlier went public but eventually went bankrupt when the dot-com bubble bursted.

Supporters, on the other hand, claim that LinkedIn’s story is different because the company has tangible income before it filed for an IPO. The company booked revenues of $243 million and net income of $3.4 million in 2010. It is expected to earn $500 million in advertising revenues in 2011.

James Ryan Jonas teaches business management, investments, and entrepreneurship at the University of the Philippines (UP). He is also the Executive Director of UP Provident Fund Inc., managing and investing P3.2 Billion ($56.4 Million) worth of retirement funds on behalf of thousands of UP employees.