Advanced: IPOs – Invest or not?

You know how IFO is always saying you should kick the tires, know the company. You know about “insight” information?
Well, here’s a dilemma: LinkedIn is about to do in IPO. Shares will start trading tomorrow. IFO is on LinkedIn. Her daughter invited her to join this business-oriented social network well over a year ago.
IFO has essentially grown up with the site. At first, she didn’t do much and didn’t connect with many people. But as time went on, she and the site got more familiar with each other and she got linked with all kinds of interesting people in Europe and the U.S. and her home town. Cool!
So – what to do? Should she invest in the company when its shares start trading tomorrow? As the article we linked to above said: “The lofty valuation for what is shaping up to be one of the most anticipated Silicon Valley initial public offerings in recent years has met with mixed reactions so far on Wall Street.
Exactly! You see, she was deeply involved in the Internet/high tech bubble of 1999 to 2001. She thinks she learned some lessons. One – don’t invest in a company with no revenue or earnings. LinkedIn does have both, but the company warned that there will be no earnings in the near future as the company increases spending on new stuff. The article continues with arguments for and against investing in the company and comments from analysts.
So what to do? She is, at this time in her life, a dividend investor. So, the decision is pretty easy. Here’s our decision, to rue or celebrate as time goes on: she’s not going to buy… at this time.

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About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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One Response to Advanced: IPOs – Invest or not?

  1. Hydrangea says:

    WSJ’s Evan Newmark in his column “Mean Street” is more frank than the news items: “There is only one thing that stands in the way of a successful pricing later today of LinkedIn’s IPO – and that’s common sense.”

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