Hugely successful IPO values LinkedIn at $8.79 billion

LinkedIn said it is now valued at $8.79 billion, roughly 38 times sales figures reported in 2010. Trade of the company's shares started on 18 May. This may come as rather hard to believe to many since the company has LinkedIn has never reported being profitable, nor have they ever made more than $250 million in any one year.

However, within minutes of the opening of its Initial Public Offering (IPO) of 7.84 million shares priced at $45, the price to twice the offered price at one point in the day LinkedIn stock peaked in excess of $122 per share (See: LinkedIn opens trading amid buying frenzy).

However, according to analysts a $9-billion valuation may seem to be overly excessive, but they point out that this may be due to the fact that LinkedIn uses some different sources of revenue including advertising revenue, premium subscriptions allowing access to more data than with basic subscriptions. Also it has hiring solutions where both job seekers and employers can pay to access job listings. However, more than anything else LinkedIn owes its valuation to data, more specifically, job data.

LinkedIn was originally launched in May of 2003, and came to be widely accepted as one of the few mainstream social media sites used by professionals, it understandably features more data on  job hunting than any other place on the internet.  However, what differentiates LinkedIn most from the other social media and job-hunting sites is that LinkedIn offers an abundance of personally identifiable information uploaded by the users themselves.

The fact that LinkedIn has 100 million users who have uploaded their own basic employment information to the site, there is a high probability of the data being accurate. With this data, LinkedIn draws its primary revenue from its hiring solutions and premium accounts.

Analysts say that the answer to the social networking site's popularity lies in its acceptance by the business community with over 2 million companies having a LinkedIn Company Page.  They further added that of all the social media sites available to businesses today, LinkedIn is outstanding and  in the 8 years of its launch it has never compromised its integrity as a professional network and continues to grow at a rate of one professional joining LinkedIn every second.

According to analysts there is no better resource for businesses to turn to when they are looking for new employment opportunities, to hire new employees, increase their  client base, expand their existing product reach, establish and build their brand, LinkedIn offers so many ways for professionals to accomplish these goals.