Home Technology News Today Diversified Revenue Model Sends LinkedIn’s IPO Soaring

Diversified Revenue Model Sends LinkedIn’s IPO Soaring

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Let the social-media IPOs begin. For all the speculation about a Facebook IPO, LinkedIn got out first — and is seeing strong interest.

LinkedIn announced the pricing of its initial public offering of 7.84 million shares of common stock at a price to the public of $ 45 per share on Wednesday. On Thursday morning, shares opened at $ 83 on the New York Stock Exchange, a $ 38 premium. As the day went on, the shares rose to $ 112, making the company worth more than $ 10 billion.

“To be honest with you, I didn’t give a lot of thought to what the opening would be like,” LinkedIn CEO Jeffrey Weiner told The Wall Street Journal. “This isn’t necessarily indicative of anything. The market will do what it will do. What we are completely focused on is our long-term plans and our fundamentals, and getting that right.”


Diversified Revenue Models

Founded in 2003, LinkedIn is the world’s largest professional network on the Internet with more than 100 million members in more than 200 countries and territories. Executives from every Fortune 500 company are represented on the network. The company has a diversified business model with revenues from member subscriptions, advertising sales, and hiring solutions.

Indeed, LinkedIn’s IPO went ahead because it is one social-media player whose revenue model isn’t based solely on advertising or premium subscriptions, otherwise known as the freemium model, said Jake Wengroff, global director of social media for Frost & Sullivan.

He noted that, according to filings, LinkedIn derives only 25 percent of its revenue, or $ 61.9 million last year, from premium subscriptions; 33 percent, or $ 79.3 million, from text and display advertising; and 42 percent, or $ 101.9 million, from LinkedIn Jobs, a job-matching or automated headhunting service. Wengroff said this last component is essentially a business or professional service delivered as software…

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