AS LinkedIn closes its first day of trading on a valuation of 36 times sales, some of us can feel a wave of nostalgia coming on. Restricted float? Yep. Only 10% of the stock was on offer. New valuation method? Check. The FT says the stock is valued at “more than $100 per user”. Remember “price-per-click” and all that nonsense? It is possible that your blogger is listed as one of those users; I had to join once to try and track down the landlord of some noisy neighbours. The revenue LinkedIn has (and will) generate from me is zero, save if it sells my name on a mailing list in which case the purchaser of that list will face a disappointment.
Back in 1999 and 2000, of course, it was argued that dotcom mania wasn’t a bubble because investors were rationally pricing in the future growth prospects of the companies concerned.
But who are these rational men? The London Times today reports that Harold Camping, a former engineer and radio preacher, is predicting that the world will end tomorrow (rather a blow for those who bought LinkedIn shares) after a massive earthquake in New Zealand. All this was forecast in the Bible, Mr Camping has calculated, written a couple of thousands of years before New Zealand was discovered by Europeans and given that name. Some calculation.
Now, of course, these kinds of eccentrics come around quite regularly. More alarming was the paper’s report that
If you believe that, a price-per-user ratio of $100 may seem quite reasonable.