I don’t want to take up space here with words when the nunbers tell the story. LinkedIn (LNKD) went public in May of last year. We’re now in February, so its been eight months. I now have a guage of what LNKD is worth.
One Year Chart
First let’s look at the one-year chart. Gosh, wild swings in the stock price after the company went public. I think this is because the stock was issued high and traveled with hype and hope in the beginning. Lately patttern has developed that shows LNKD seems to bottom around $60. I would like to be a buyer around $65.
The problem is at $65 I’d be buying in at 140 times earnings, since LKND is suppoed to make $0.57 this year. Looking ahead to 2013 the company could make $1.00 (see this in the Earnings Table). At the current $80 price that would be paying 80 times next year’s earnings. I think 60 times would be more appropriate, and I would rather wait until later in 2012 to even pay that.
Fair Value
60 times earnings is my Fair Value on LNKD. Here’s what the upside/downside is from here.
Bottom Line
I’m now watching shares of LNKD. The stock’s expensve. I would consider buying the stock around $65 late in 2012.
