Congratulations Linked-In You Just Got Screwed Out of $130 Million

Excerpts from the article:

May 19, 2011, 11:15 AM


The stock of social-network LinkedIn has had a heck of an IPO debut this morning, popping 90%+ above the IPO price.

It also means LinkedIn's underwriters, Morgan Stanley, Bank of America, et al, just screwed the company and its shareholders to the tune of an astounding $175 million. (Just the way the underwriters of another recent hot IPO, Zipcar, screwed that company).


How?

By wildly underpricing the deal and selling LinkedIn's stock to institutional clients way too cheaply.

LinkedIn's stock is trading above $80 a share this morning. Bank of America and Morgan Stanley sold the same stock to their best institutional clients at $45 a share last night. The value of LinkedIn-the-company, it seems safe to say, has not appreciated by 90%+ in the past 12 hours. And that means that, on its underwriters' advice, LinkedIn sold its stock way too cheaply. It also means that the institutional investors who bought LinkedIn's stock last night are high-fiving each other this morning, celebrating their instantaneous 90% gain. (Lots of them are probably also dumping some stock).

and deeper into the article:

Here's a simple analogy:

Imagine if the trusted real-estate agent you hired to sell your house persuaded you to sell it to her best client for $1,000,000 by telling you this was the best price she could get. And then, the next morning, the person who bought your house immediately turned around and sold it for $2,000,000 (using the agent to sell it, naturally).

How would you feel if your agent did that?

Shafted.

And that's EXACTLY what BOFA and Morgan Stanley just did to LinkedIn and LinkedIn's shareholders.

Surprise, Surprise! Well I guess Bank of America and Morgan Stanley continue to show their true colors and consistency as equal opportunity screw agents.

Read more: www.businessinsider.com...

In turn it exposes everyone involved...Win-Win

This can't be insider info can it?

But, that's illegal...Well, it is if I do it.

And the rich get richer.

Historically, this is what has happened in most tech related companies since the 90's.

This is how everyone in the deal makes money. Even though Linked-in got screwed out of some money, those who priced the IPO were in the pockets of others who will profit from this.

Now.......... the average American can purchase a stock that is overpriced and take all the risk, while the big businesses who get the IPO price will make hand-over-fist.

That's just the way it works! They were supposed to stop this kind of stuff years ago.

And here's what thestreet.com had to say about this (excerpts from the article):

LinkedIn's IPO: Why You Weren't Invited
NEW YORK (TheStreet) -- LinkedIn(LNKD_) has doubled on its first day of trading, but most of those profits are out of reach of retail investors.

Pascutto says these "presidents list" clients often don't even have to put up the money to buy the shares at the offer price. The broker simply sells the stock at 100% profit and passes the profit on to the client.

Because only the underwriters know what all the investors are willing to pay, issuers such as LinkedIn have to take their word for it on what the market deems the company to be worth.

In the case of LinkedIn, the underwriters clearly undershot the market, meaning those with access to the IPO got a huge first trading day profit.

If the initial offering price had been higher, that profit would have gone to the issuer -- LinkedIn -- instead, suggesting LinkedIn (ostensibly a client of the Wall Street firms) got a raw deal so the Wall Street firms could reward their other clients -- investors in the deal.

Spokespersons for JPMorgan, Morgan Stanley and Bank of America declined comment. LinkedIn had no immediate comment.

www.thestreet.com...

And what did Cramer of Mad Money have to say about the Linked-In deal?

CRAMER ON LINKEDIN (LNKD):
"Outrageous!" "Ridiculous!" "Preposterous!"


Jim Cramer went off on the LinkedIn IPO this afternoon.

He described it as "outrageous," "preposterous," and "ridiculous" and accused the underwriters of playing the same game everyone played back in the 1990s.

More on this story and watch his video interview here:

businessinsider.com...

And now Peter Thiel agrees that Linked-In got screwed in their recent IPO:

May 31, 2011, 9:10 AM
PETER THIEL: Wall Street Screwed LinkedIn, Mispriced IPO


PayPal founder and early LinkedIn and Facebook investor Peter Thiel agrees with our assessment:

The Wall Street banks that took LinkedIn (LNKD) public drastically underpriced the IPO, screwing the company and its selling shareholders out of ~$200 million.

Here's what Thiel told the Financial Times:

"Whenever a stock price goes up as much as it does with LinkedIn, you assume the IPO was mispriced and the bankers screwed up...There continues to be a certain antipathy by Wall Street banks toward Silicon Valley companies where they don’t quite believe it’s real.”

source

Originally posted by manta78
And now Peter Thiel agrees that Linked-In got screwed in their recent IPO:

May 31, 2011, 9:10 AM
PETER THIEL: Wall Street Screwed LinkedIn, Mispriced IPO


PayPal founder and early LinkedIn and Facebook investor Peter Thiel agrees with our assessment:

The Wall Street banks that took LinkedIn (LNKD) public drastically underpriced the IPO, screwing the company and its selling shareholders out of ~$200 million.

So is Peter Thiel one of the investors who sold his shares for undervalue? Or is he one of the ones who bought at under value?

And aside from this shadiness, I can't believe Linkd-in is actually worth anything...at all. Have any of you guys actually used it? Its nearly worthless as a business networking tool (which is what it is being marketed as) and incredibly basic.