LinkedIn Shares Retreat After More Than Doubling in IPO Week

May 23, 2011, 5:09 PM EDT By Danielle Kucera and Brian Womack

(Updates with closing shares in the second paragraph.)

May 23 (Bloomberg) -- LinkedIn Corp., the networking website aimed at professionals, declined 5.2 percent in New York trading today, after more than doubling in the week of its initial public offering.

The shares fell $4.79 to $88.30 at 4 p.m. on the New York Stock Exchange. On May 18, LinkedIn announced the sale of 7.84 million shares at $45 apiece in its IPO, raising $352.8 million. The underwriters of the company’s offering exercised an overallotment option to buy more shares two days later, boosting the offering size to $405.7 million.

LinkedIn, the first major U.S. social-media company to go public, has a market value of $8.4 billion, or about 22 times 2011 revenue, assuming first-quarter sales are matched the rest of the year. Even with today’s decline, investors aren’t giving up on LinkedIn, said Clay Moran, an analyst at Benchmark Co. in Boca Raton, Florida.

“I don’t think the drop in the stock is enough to indicate that there’s a sort of reevaluation and rethinking going on,” Moran said. The drop is “a natural reaction to the surge in the stock price that occurred last week, especially given the market weakness” today.

The Standard & Poor’s 500 Index declined 1.2 percent to 1317.37, while the Nasdaq index dropped 1.6 percent to 2758.90. The New York Stock Exchange composite index fell 1.5 percent to 8236.55.

LinkedIn is losing gains spurred by buyers scrambling for a limited number of shares on the first day of trading, said Darren Fabric, a Chicago-based managing director at IPOX Capital Management LLC, which oversees about $2.5 billion and invests in IPOs.

“It was up a little too much,” he said in a telephone interview. “They didn’t offer that many shares. People are probably taking a look and saying maybe I’ll wait. The price is probably still a little crazy.”

--Editors: Lisa Rapaport, Nick Turner

To contact the reporters on this story: Danielle Kucera in New York at dkucera6@bloomberg.net; Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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