LinkedIn Financials, Key Metrics, Valuation; Hit $122 High ($11.5 Billion Valuation) After $45 IPO (LNKD)

$LNKD (LinkedIn Intraday Chart) - FreeStockCharts.com
The social-networking trading frenzy has officially begun. LinkedIn ($LNKD) traded 171% above its IPO price of $45 when it hit a $122.70 high in its first day of trading on the NYSE. $LNKD opened at $83 and closed at $94, or an $8.9 billion market cap. The $122 high valued LNKD at $11.5 billion. So is Monster Worldwide ($MWW), TheLadders, CareerBuilder and ManPower ($MAN) now in play? Matt Nesto, on the Daily Ticker with Henry Blodget, wondered if LinkedIn would buy head hunter/staffing agency Robert Half International ($RHI). Robert Half had $3.2 in revenues during the past 12 months.

LinkedIn could start their own electronic staffing agency. How about taking it one step further; someone starts a professional social-networking site where users actually work for potential employers from their computer at home as unpaid TeleInterns™ or temp-to-hire TeleTemps™. Remember my post yesterday on telepresence hologram technology using Cisco/Musion Systems? Multiple TeleTemps™ could work in your office as holograms from their computers at home.

LinkedIn is growing significantly. From the prospectus:

Quarterly Adjusted EBITDA Trend
LinkedIn Quarterly Revenue Trend
"We have achieved significant growth as our network has scaled and as we have expanded our product offerings. From 2009 to 2010, net revenue increased $123.0 million, or 102%, net income increased $19.4 million, or 487%, and adjusted EBITDA increased $33.3 million, or 227%. In the three months ended March 31, 2011, net revenue increased $49.2 million, or 110%, net income increased $0.3 million, or 14%, and adjusted EBITDA increased $4.2 million, or 46%, over the three months ended March 31, 2010. See “Adjusted EBITDA” below for a definition of adjusted EBITDA and a reconciliation of adjusted EBITDA to net income (loss)."

As of March 31, 2011, LNKD's price/sales ratio as of today's close ($94.25 per share or $8.9 billion market cap) was 30 using $292 million trailing 12 month revenues (see numbers above). You can breakout earnings as well. The price/sales ratio seems pretty steep; however, if sales keep rising exponentially it could easily fill the gap. Read Henry Blodget's post showing different revenue, net income and EBITDA projections for 2011, 2012, 2013 and 2014.

Other comparables: Goldman Sachs's recent investment in Facebook (FBOOK) valued at 25x sales, Google (GOOG) trades at 5.5x sales, Yahoo (YHOO) at 3.5x sales, Salesforce (CRM) at 10.9x sales, OpenTable (OPEN) at 19.29x sales, China's Baidu (BIDU) at 33x sales, China's Renren (RENN) at 70x sales, Monster Worldwide at 1.9x sales, and Apple (AAPL) at 3.6x sales. How do you value this?

Interesting earnings comparable for Facebook (TheStreet.com):

"Using LinkedIn's current valuation as a comparable metric-- 600 times its 2010 earnings of $15.4 million -- Facebook would be worth around $360 billion in the public markets. The company reportedly earned $600 million in net income"

Eric Jackson of IronFire Capital Thinks LinkedIn IPO is Overvalued

Source: LinkedIn Press Center
LinkedIn, or Facebook for professional profiles, will be trading on the NYSE ($LNKD) today after it IPO'd 7.84 million shares at $45. It values the company at $4.25 billion. See the 10% owners and LinkedIn press release here. Eric Jackson, founder of hedge fund IronFire Capital, thinks it is overvalued. Watch the Bloomberg video below and read his article at Forbes ("Why You Should Opt Out of the LinkedIn IPO"). It will be very interesting to watch social networking companies trade on the exchanges. I originally found the video on Eric Jackson's blog Breakout Performance. He is also on Twitter. I have a question: How will social networking analysts and traders quantify immediate flight risk? (ex. "Was Friendster valuation too high?" MarketWatch 5/26/2004; "Amazingly, MySpace’s Decline Is Accelerating" - TechCrunch 3/23/2011).

Technical Views On The Market (Louise Yamada, Jeff Macke and S&P Charts) 5/18/2011

Jeff Macke and Louise Yamada (Louise Yamada Technical Research Advisors) gave technical views on the market yesterday (5/17/2011) on Breakout (Yahoo Finance).
My chart below shows SPX trend 

I threw up some lines as well on the S&P 500. You can see the uptrend line from August 2010, $1344 resistance level from February 2011 and an ascending channel which started in March 2011. The second chart shows a descending channel from the beginning of May. At this point there needs to be confirmation, but there is a possibility the market could breakdown here. So the S&P is at an inflection point and waiting for a downside catalyst for volatility. I remember on 4/28/2011 on CNBC Doug Kass said he was short SPDRS ($SPY) with out-of-the-money calls as a hedge. On May 9 he wrote an article titled "Kass: Sell The Rallies". Follow him on Twitter for updates. It probably makes sense to hedge either direction right now. Even SAC Capital's Steve Cohen said he sees a market pause. SAC Capital actively manages $14 billion. Also GMO's Jeremy Grantham said to lighten up on risk. The volatility index closed at 16.23 today (see $VIX vs. $SPX chart below). I'm going to watch currencies (EUR/USD, USDX and UUP) and commodities.

LinkedIn's $45 IPO Values LNKD at $4.25 billion; List of 10% Owners (SEC)

LinkedIn Corp. Ownership (SEC)
LinkedIn priced its IPO at $45 per share which values the company at $4.25 billion (read more at Reuters). Check out the 10% owners of LinkedIn Corp below via SEC.gov, and read the prospectus. This is the first social networking IPO. Next up Facebook ($FBOOK), Zynga ($ZYNGA), Twitter ($TWIT) and Groupon ($GRPN)? Let the value unlocking begin. From the LinkedIn Press Center:

"Mountain View, Calif. — May 18, 2011 — LinkedIn Corporation, the world’s largest professional network on the Internet, today announced the pricing of its initial public offering of 7,840,000 shares of common stock at a price to the public of $45.00 per share. A total of 4,827,804 shares are being offered by LinkedIn Corporation, and a total of 3,012,196 shares are being offered by selling stockholders. In addition, LinkedIn Corporation has granted the underwriters a 30-day option to purchase up to an additional 1,176,000 shares to cover over-allotments, if any. LinkedIn will not receive any proceeds from the sale of shares by the selling stockholders."

The Joy of Natural Gas, It's Here Aplenty - Guest Post

Source: NGSA.org
Guest post by Llewellyn King for OilPrice.com

The Joy of Natural Gas, It's Here Aplenty

Tired of high gasoline pump prices? Wondering why, with our fearsome energy hunger, all the energy seems to be in the Middle East?

That was yesterday's story.

Almost overnight -- well, in a few short years -- the energy picture has been changing in the US. We are not energy beggars anymore. We have energy bounty -- and that does not include the energy from wind and sun, or the controversial energy from the atom.

Now we have plenty of the most versatile of the hydrocarbons -- more versatile than coal, and oil. It is natural gas; and it is going to change the face of America remarkably quickly, whether it is used to make electricity for electric cars or is burned directly in cars.

Natural gas is the new oil, maybe the new gold, and certainly the most exciting energy development in a long time.

Indeed, it is a Cinderella story: a hopeless orphan who is now the belle of the ball.

Originally, natural gas was found in conjunction with oil and was regarded as something of a nuisance. It was mostly cursed and "flared" or burned at the well; and it is still flared when there is no way of moving it to market, either in a pipe or as a liquid. Cities favored a low-grade gas made from coal for lamps and heating because coal could be transported by rail.

The Future: Holographic TelePresence Video Technology (Videos)

Cisco Conference (Source: Musion Systems Vimeo)
Am I missing something here? Why hasn't holographic telepresence technology been adopted by the household sector yet? Is it even available? It is currently being used on stages and podiums during conferences or shows. In the first video (from 2007) watch Cisco CEO John Chambers on a stage in Bangalore, India, and two Cisco executives in San Jose, California, demonstrate for the first time an "on-stage telepresence experience" using Musion System's holographic projection. I also embedded a video from TelePresence Options, a site devoted to telepresence technology. Won't this revolutionize household entertainment and communication? Imagine being able to beam in a live concert or boxing match anywhere in your house, or even outside in 3D 4D. Or beaming in a group of friends or family who live in different locations. Could you beam someone while walking down the street with a mobile device? Corporations have already adopted telepresence technology for video conferencing. I want to see 4D telepresence holograms; this has to be the future. Companies competing in the telepresence space: Cisco, Skype (Microsoft), Polycom, Avaya... Anyone have more videos? I stumbled upon telepresence hologram techonology after reading this post by Rick Bookstaber: "Get Ready For The Mother Of All Commodity Paradigm Shifts, Which No One Sees Coming". Telepresence technologies could cut the need for personal and business travel dramatically.

Video #1: "Cisco On-Stage Holographic TelePresence Experience" MusionSystems (2007)
Video #2: "Musion TelePresence Launch - Berlin" (2009)
Video #3: "ImmersiveTech Summit 2010 Howard Lichtman Telepresence"

Bill Gross Explains PIMCO's Negative "Government-Related" Exposure, QE3 Will Be Policy Language

Bill Gross, who runs the $240 billion PIMCO Total Return Fund (PTTRX), was on Bloomberg TV today explaining why the fund increased its negative "government-related" exposure, and if it meant the fund was short treasuries. He said it was related to swaps which are derivatives. Watch the Bloomberg video after the jump for more information. He also talked about Greece, the debt ceiling and U.S. Dollar.

As of 4/30/2011, the PIMCO Total Return Fund increased "net cash and equivalents" to 37% from 31% on 3/31/2011; decreased "mortgage" exposure to 24% from 28%; decreased "investment grade credit" to 17% from 18%; increased "emerging markets" to 11% from 10%; remained unchanged on "non-US developed"; decreased "high-yield credit" to 5% from 6%; remained unchanged on "municipal" securities, and decreased "government-related" exposure to -4% from -3%.

Bill Gross on PIMCO's negative "government-related" exposure using swaps, and the end of QE2:
"That to some extent speaks to a durational statement, to the extent that you're selling swaps and basically reducing the duration of your portfolio."
"We simply suggest that since the Fed has been purchasing 70% to 75% of all the Treasuries that have been offered over the past year to year and half, that it's a legitimate question of who will buy them and at what yield. We simply think that treasury yields have been artificially repressed not only by QE1 and QE2 but by the policy rate."
"The Federal Reserve of New York has estimated perhaps 50 to 100 basis points of under-yielding, over-priced valuation from these programs in combination."
"We think 10-year treasuries will be higher in yield. Now they're around 3.18%; we suspect still that 4% is a beginning level of attraction going forward."

Language will dominate Fed policy after QE2 (June 30):
"If the Fed continues to suggest that unemployment is a priority and inflation is contained, then you can expect Fed funds to stay at twenty-five basis points, and that's a very significant anchor for 2s, 5s and even for 10s. So follow the policy language going forward. Expect QE2 to end and that QE3 probably will take the form of language instead of actual purchases going forward."

Eric Sprott On The Silver Raid; Still Sees $100 Silver (Keiser Report Video)

Silver ETF Plunge ($SLV)
Two weeks ago there was a major exhaustion point in the silver chart which resulted in a 33% crash from its peak ($49.30 I believe). SLV (silver ETF) put options and vertical spreads were active and made a lot of money betting on downside risk. I think technicals combined with margin calls, and I'm sure manipulation (which Sprott gets into), played a major role in the plunge. To your left is a SLV chart showing the plunge.

Eric Sprott, who runs Sprott Asset Management, is active in silver and gold, and created the Sprott Physical Silver Trust (PSLV) which trades on the NYSE. He was on CNBC in May 2010 telling you to buy silver which was a great call. A few months later Mr. Sprott gave a presentation at the Casey Research Gold & Resource Research Summit and said "between the ETFs, you and us, there is no (physical) silver left."

Before the major sell off, Sprott sold PSLV units at a premium to NAV, but said he reinvested the proceeds back into silver (spot) or shares. He believes the silver sell off was a "raid" and related to the paper markets, margin increases and the commercial shorts. Zero Hedge explained the details today in a post. Eric Sprott is still very bullish on silver and thinks it could hit $100 an ounce. Watch the video below courtesy of Keiser Report.

Steve Cohen at SALT, Paulson at UBS Conf, Whitney Tilson, John Taylor, Jim Rogers, Druckenmiller (5/15/2011)

Guru/hedge fund link fest (5/8/2011 to 5/15/2011)

Steve Cohen - S|A|C
*Billionaire hedge fund manager Steve Cohen, who runs $14 billion hedge fund SAC Capital, spoke at the SALT Conference (SkyBridge Alternatives) last week in Las Vegas. From the transcript courtesy of Deal Breaker, Mr. Cohen sees a market pause ("maybe people are worried about a growth scare") but thinks the second half of 2011 will be "decent". He believes the energy sector is "interesting" and the "commodities sell-off provides a nice entry point". He said he's more worried about 2012 as some of the government stimulus wears off. And regarding the budget deficit, Cohen said the bond market could force government action. This is the first time Distressed Volatility has seen Steve Cohen give market calls. When is your blog starting up Mr. Cohen?

*What If the U.S. Treasury Defaults? (Stanley Druckenmiller, who ran money with George Soros) - WSJ (h/t Zero Hedge)
"Some have argued that since investors are still willing to lend to the Treasury at very low rates, the government's financial future can't really be that bad. "Complete nonsense," Mr. Druckenmiller responds. "It's not a free market. It's not a clean market." The Federal Reserve is doing much of the buying of Treasury bonds lately through its "quantitative easing" (QE) program, he points out. "The market isn't saying anything about the future. It's saying there's a phony buyer of $19 billion of Treasurys a week." 
Warming to the topic, he asks, "When do you generally get action from governments? When their bond market blows up." But that isn't happening now, he says, because the Fed is "aiding and abetting" the politicians' "reckless behavior."

*Here's What John Paulson Said On Housing, Financials, Gold and the S&P at UBS's Financial Services Conference (he's bullish on the recovery, sees 40-60% upside in bank stocks and 34% upside in the S&P) Business Insider (5/10/2011) 

*Currency Hedge Fund Manager John Taylor Says ‘Risk Rally’ (higher-yielding assets) Is Coming to an End (FX Concepts) - Bloomberg (5/12/2011)

*Jim Rogers Says Dollar Is Long-Term ‘Total Disaster’ (Jim is "currently long the dollar because the market consensus is for the currency to fall", "short emerging markets", and believes the 30 year bull market in U.S. bonds is coming to an end. But, like the dollar, he's not shorting because "95 percent of the market expects them to decline.") - Bloomberg (5/12/2011)

*Value Investor Whitney Tilson's May 2011 Presentation (T2 Partners), $MSFT, $BRK - Zero Hedge (5/3/2011)

*Cyclical Bulls Within Secular Bears & Their Short Duration - Pragmatic Capitalism (via John Hussman's Weekly Market Comment).
"As the guys at Nautilus Capital note, cyclical bull markets within secular bears have tended to average just 26 months, with an average gain of 85%, while cyclical bears within secular bears have averaged 19 months, with steep average losses of -39%."

*Felix Zulauf turns bearish, expects major correction and QE3 - Credit Writedowns

George Soros Speaking at CATO On Hayek, Reflexivity (4/28/2011)

Reflexivity Cycle
If you like economics and market behavior you might be interested in this recent discussion at the CATO institute ("Richard Epstein, George Soros, and Bruce Caldwell Discuss Hayek's Constitution of Liberty"). I added the new rap battle between Keynes and Hayek for your entertainment after the video.

To your left is a diagram of a cycle driven by reflexivity (price -> perception -> fundamentals). Read "George Soros, Reflexivity and Market Reversals" by Marvin Bolt at Seeking Alpha on March 16, 2009 (around the historical market low). Here is a quote from the end of the article.

"We are at a unique time in history. The economy and financial markets have been driven by a variety of reflexive forces resulting in widespread destabilization. However, a fully developed parabolic stock market decline offers strong evidence that the extremes have been reached. Insights from George Soros’ theory of reflexivity, supported by examples from the past, lead us to conclude that the imminent reversal will be breathtaking. As we wrote this, the Dow had just surpassed 7,000 after testing 6,500. Indeed, the reversal might be at hand." That worked out quite well. (Continue reading at Seeking Alpha).

George Soros quotes from the transcript; watch videos after the jump:

"Hayek argued that economic agents base their decisions not on reality but their interpretation of reality and the two are never the same. That's what I called fallibility. Hayek also recognized that decisions based on imperfect understanding are bound to have unintended consequences. But Hayek and I drew diametrically different inferences from this insight. Hayek used it to extol the virtues of the invisible hand, which was the unintended consequence of economic agents perusing their self interest. I used it to demonstrate the inherent instability of financial markets.

In my theory of reflexivity I assert that the thinking of economic agents serves two functions: on the one hand, they try to understand reality that's the cognitive function. On the other, they try to make an impact on the situation and that's the participating or manipulative function. The two functions connect reality and the participants' perception of reality in opposite directions. As long as the two functions work independently they each produced determinate results. But when they operate simultaneous they interfere with each other by introducing an element of uncertainty into both the participants' understanding and the actual course of events. I call the interplay between the two functions that gives rise to the uncertainty reflexivity. 

The two way connection between the cognitive and manipulative functions works as feedback loop; the feedback is either positive or negative. The positive feedback reinforces both the prevailing trend and the prevailing bias and leads to a mispricing of financial assets. Negative feedback corrects the bias. At one extreme lies equilibrium, at the other are the financial bubbles. They occur when the mispricing goes too far and becomes unsustainable and the boom is then followed by a bust. In the real world, positive and negative feedback are intermingled and the two extremes are rarely if ever reached." (read the full transcript)