LinkedIn announced this morning that it is raising its initial IPO from between $32-35 to between $42-45, according to TechCrunch. This 30% increase in share price puts the overall valuation of the company at over $4 billion. The Social Networking site, geared towards working professionals and occupational networking, reported a 110% increase in revenue in Q1, and this is likely the cause for the jump in valuation. As the added revenue came from a new hiring/recruiting service, some are asking if the higher valuation is deserved, as the site hasn’t proved that it can keep up that kind of revenue growth.
As LinkedIn prepares to sell 7.8 million shares on the New York Stock Exchange, one is forced to ask if this is yet another symptom of a dangerous tech bubble, a speculation nightmare that led to the dot-com bust 10 years ago. VC confidence in startups, and increasingly high valuations of Web 2.0 communications and social networking platforms, has been generally on the rise. Facebook is valued at $33 billion, Microsoft bought Skype for $8.5 billion, and analysts are calling Apple the most valuable company in the world. With LinkedIn pricing itself 30% higher based on a good Q1, it’s certainly hard to think otherwise.