LinkedIn vs. Facebook IPO Success

LinkedIn vs. Facebook IPO Success

 

LinkedIn’s recent IPO performance appears to have crushed the perception of big named company IPOs from Facebook, Yelp, Zynga, Groupon and Pandora. Based on their recent closing price, LinkedIn is up 141%. According to BusinessInsider Linkedin is, “the best-performing IPO this year by a huge margin. The next closest competitor, Bankrate, is up about 28 percent from its initial public offering.”

Timing may have been a factor for LinkedIn’s success. They have also seen consistent growth in unique visitors. Investors waiting for highly anticipated IPOs like Facebook may have helped increase the success of LinkedIn as well.

Although Facebook has had a lot of negative press regarding its IPO, CBS news reported that Facebook’s IPO was actually a success. CBS explained, “LinkedIn (LNKD) shares popped from the start in the professional networking company’s 2011 IPO and more than doubled in the first few days.”  Investment bankers made a bundle. This led people to think Facebook had been a flop. However, CBS author Allan Roth explained, “my definition of a successful launch of a new publicly traded stock doesn’t rest on how much money the investment bankers make. It rests on how close the offering price is to where the stock actually trades. The fact that Facebook shares closed at nearly their offering price tells me that that investors thought it was fairly priced. That’s pretty amazing, in my view, given all the hype over Facebook.”

Colin Lokey from SeekingAlpha explained that when comparing Facebook to Linkedin, fundamentals show that Linkedin is overvalued. Lokey warned, “Investors should of course, keep in mind that the fact that LinkedIn is far too expensive doesn’t mean Facebook is fairly valued at half of LinkedIn’s price.”  Prices have been affected by the recent Facebook IPO. Yahoo’s Finance writer Jeff Macke did not share Lokey’s opinion on pricing when he stated, “Linkedin stock has been dragged down over the last few weeks by the undercurrent of the Facebook Titanic.” He sees LinkedIn as a “screaming buy”.

Only time will tell how well LinkedIn and Facebook will perform. BizJournals recently quoted Linkedin’s CFO Steve Sordello about the importance of a company’s IPO results. “”An IPO is a one-time event, and what really matters is the long term. If it rains on your wedding day, you’re going to remember it rained but it’s not going to influence the marriage.”

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Amazon Takes on Netflix Offering Movie Subscriptions

Those interested in immediate gratification have made Netflix a popular choice for movie viewing.  Amazon has now taken on the challenge of competing with Netflix.  Amazon’s “Prime” subscription program costs $79/year which includes their 2-day shipping on purchases.  Prime also includes more than 5,000 video-streaming movies and television shows.  Most of what they offer includes older television seasons and movies.

Netflix’s “Watch Instantly” program costs $7.99 a month and video-streams over 20,000 titles.  This brings their price to over $95/year.  Many of their movies are newer, but their TV shows consistent of previous seasons.

Amazon is entering this market in hope of increasing their digital business.  According to the Wall Street Journal, “The streaming-video offering could lead customers to buy or rent the 90,000 movies and shows that Amazon already offers on an a la carte basis.”

In an effort to compete, Netflix has entered into a two-year deal with CBS to provide television shows.  WSJ reported, “Netflix will pay CBS hundreds of millions of dollars over the course of the nonexclusive, two-year licensing pact, which gives CBS the option to extend it for up to two years and add more content in return for higher compensation.”

How will this affect the cable and satellite industry’s relationship with TV networks?  That is something that TV executives must consider as more than $30 billion a year comes to networks from subscriptions.

Netflix is no stranger to competition.  Netflix’s competition with Itunes, led to their removing limits for streaming of video. PCworld reported, “Previously the amount of streaming content subscribers could access was dependent on their subscription level. For example, the $16.99 membership allowed for 17 hours of streaming movie content. With the new unlimited plan, all subscription levels, with the exception of the lowest $4.99 plan, will be able to stream as many Netflix movies and TV shows as they’d like to their PCs.”

Itunes has been tough to beat in movie downloads.  As Forbes pointed out, “ITunes already dominates the world of movie downloads. In 2010 the service accounted for 64.5% of all movie downloads and rentals.”

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