LinkedIn sinks, Silicon Valley fears doom
LinkedIn's plunge could cause doom in Silicon Valley where investors and venture capitalists pour billions into start-up ventures, according to investors.Updated: Aug 12, 2011 12:25 IST
LinkedIn, the world's largest professional networking site, bore the brunt of the Monday mayhem on Wall Street, sinking more than 17 percent.
The market drubbing received by the newly minted IPO company triggered fears that other tech companies going public may have to postpone their initial public offerings.
LinkedIn's plunge could cause doom in Silicon Valley where investors and venture capitalists pour billions into start-up ventures, according to investors.
The first major social networking company to go public this May, LinkedIn claims more than 120 million members. Just four days ago, it had beaten forecasts to post more than 100 percent jump in revenue in its second-quarterly results.
It was the first quarterly results after LinkedIn went public, sending its stock soaring more than $105 - up 10 percent - after the quarterly results came out.
But Monday's plunge in its fortunes led investors and market analysts to fear that the expected initial public offerings for other tech companies are in jeopardy.
The market drubbing for LinkedIn and other newly minted IPO companies such as Zillow and Pandora has made venture capitalists and market analysts think whether "the nascent Internet bubble is about to pop,'' according to USA Today.
The paper said expected public offerings for social gaming company Zynga, daily deals website Groupon and, possibly, Facebook could face problems.
"The sound you just heard was the IPO window slamming shut,'' it quoted Geoff Yang, a partner at Redpoint Venture,as saying.
"I don't think anyone has a good answer on that yet, it is too raw and too new. In general, market conditions are going to make it hard for any IPO to come out,'' Deutsche Bank
communications technology analyst Jonathan Goldberg told VentureBeat.
First Published: Aug 09, 2011 13:40 IST