Social networking site LinkedIn's white-hot stock debut Thursday had people wondering whether the '90s were back, as the market valued an 8-year-old company at $8.91 billion.
Investors had a shot at 7.8 million shares in the initial public offering from the Mountain View, Calif.-based firm.
The stock was issued at $45. After opening at $83, it shot up to a high of $122.69 before noon and then fell back to close at $94.25. Volume exceeded 30 million shares in active trading that outdid Google's 2004 IPO, which saw volume of more than 22 million shares on its first day.
"There's a frenzy to get in on anything associated with social [media]," said Josh Bernoff, a researcher and analyst at Forrester Research. "To a certain extent the expectations have run ahead of reality, and that's certainly one characteristic of a bubble."
The reality of social media, however, is one of enormous potential, he said.
LinkedIn, a site where professionals network and post their work experience and companies advertise job openings, is ranked 11th in the United States by Web traffic information site Alexa.com.
The market was "showing a lot of enthusiasm for a company that can build a great product," said Mark Fasciano, managing director of Canrock Ventures, a venture capital firm in Jericho. Yesterday's buzz doesn't mean that his firm plans to go public anytime soon with a social networking site for nonprofit fundraising that it started called Karma411.com.
It remains to be seen whether LinkedIn's strong IPO will bear a closer resemblance to Google, which opened at $85 per share when it went public in 2004 and now trades around $530, or so many other dot-coms that investors snatched up in the '90s before they went bust.
The trading frenzy translated into phone client queries, but not orders at Melville-based brokerage firm Lantern Investments, said Keith Lanton, president.
"People have learned that to some extent chasing the latest, greatest and hottest isn't always a path to success," Lanton said. He said his clients weren't interested in buying the stock at $100 a share.
LinkedIn launched in 2003 and ended the year with 14 employees and more than 78,000 members, according to its IPO prospectus. In eight years it has grown to 990 employees and more than 90 million members.
The company gets 41 percent of its revenue from the employment services it offers businesses, while premium subscriptions and advertising generates the remainder.