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LinkedIn’s $10bn stock valuation raises fears of second technology bubble

Social networking site LinkedIn's stock market valuation of $10bn (£6bn) has raised concerns of a new tech bubble.

Social networking site LinkedIn's stock market valuation of $10bn (£6bn) has raised concerns of a new tech bubble.

The company more than doubled its share price after its debut entry on the stock market yesterday (19.05.2011), which reached $120 per share at the peak. The valuation far outstrips the company's profits which were around $19.4m in 2010.

Some analysts have raised fears this could lead to a new tech market bubble as a frenzy of social media flotations could now follow.

Gordon MacIntyre-Kemp, lead social marketing consultant at business marketing firm Intelligise, says that while the LinkedIn valuation could be justified in the long-term, other social media companies, such as Facebook, are not ready to go to market.

"There is the potential for a bubble, as the revenue models for sites such as Facebook are not yet clear," he said.

But executive vice-president at the New York Stock Exchange, Scott Cutler, denied the clamour for LinkedIn shares signalled the start of another dot.com boom.

"The dot.com firms in the 2000s were companies with no revenues, no profits and dreams. The companies coming today are marked with significant revenue, profits, global growth, business penetration and, most importantly, experience, maturing business models through at least one major financial crisis. If today is any sign of things to come, we are in for an exciting race in the next year. Pick the winners," he said in a blog post.

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