Market Value



LinkedIn shares drop 40%; A sign of Tech bubble?
Market Value
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On February 5, 2016, the stock price of LinkedIn, a highly successful company once valued at $20 billion, fell by 50%.

  • LinkedIn’s value changed from $5-10 billion in 2012 to $20-25 billion in 2015 to $10 billion in February, 2016

The decrease in LinkedIn’s value was caused by the company’s disappointing performance in the market in 2015. However, LinkedIn’s plummeting profits in 2015 were not as significant as their drop in 2014.

  • Wall Street’s predictive sales figures for LinkedIn Wall Street: $3.9 billion vs. actual sales figures: $3.6 billion
  • 2014 Q4 report: $3 million surplus vs. 2015 Q4 report: $8.4 million deficit

The fall in LinkedIn’s share prices reflected the market’s concern about the Tech Bubble phenomenon.

  • Instability in the international stock market has intensified the uncertainties concerning the Silicon Valley Tech Bubble.
  • The earnings announcements from such tech companies as Evernote and Twitter have increased fears about the Tech Bubble.

In the meeting following the earning announcement, the CEO of LinkedIn stated that the fundamental worth of LinkedIn had not changed and that he would go on strengthening the company with strategic initiatives.

  • “I believe that the vision that our company pursues and the value that we have for our customers remain the same. The changing market conditions have incurred the unfortunate fall in our share price. However, we at LinkedIn promise you that we will continue our efforts to improve the company. We hope that as the market conditions improve, we can show you why we deserve your trust and this will subsequently lead to an improvement in the company’s valuation.”

Do you think LinkedIn’s value has been overestimated in the past? Do you think LinkedIn will restore its stock prices? What are your thoughts on the tech bubble?

Please discuss LinkedIn’s current situation and the Tech Bubble with your Tutor in English.

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