The biggest story in tech this year has been Facebook’s IPO, which, depending on how you look at it, was a big flop.It was good for Facebook, in that it got as much money as possible from investors, but it was bad for Facebook because the stock collapsed, hammering morale within the company. It also led to a lot of investors trashing the company, and just a negative vibe around Facebook overall.
Compare that to LinkedIn, which priced its IPO at $45, and had the stock jump over $100 on the first day of trading. LinkedIn missed out on some money, but it gave the company a healthy glow. That glow has lasted throughout LinkedIn’s life as a public company.
The stock has risen, and it’s considered one of the most successful tech IPOs. Especially in comparison to Groupon, Zynga, and Facebook, which have all had their shares clobbered.
On stage at IGNITION, Business Insider editor-in-chief Henry Blodget asked LinkedIn CEO Jeff Weiner if he regretted not pricing the IPO higher. Weiner said no. He wanted to attract long-term, blue-chip investors, and the IPO did that.
However, he warns that there is no simple solution for companies going public. There is no one-size-fits-all solution. It depends on a lot of variables—the investors your looking for, the valuation, the liquidity, the number of orders coming in, etc.
More generally, in talking about the IPO process, Weiner said it’s like a marriage. When you’re in a long-term relationship with someone, lots of friends and family members ask you, “When are you guys getting married?” Likewise, when you’re a longtime, successful private company, people ask, “When is the IPO?”
And in a marriage, there’s a lot of energy, a lot of focus aimed at the big event. But, it’s a “singular event,” and it won’t have a big impact on the marriage overall. (Generally speaking.)
The price of the IPO, according to Weiner, is like the weather on the day of your wedding. It’s one detail you’ll remember, but it has “very little influence on the marriage.” Likewise, the price is something you remember, but it shouldn’t have a long-term impact on the company.
We’re starting to see this with Facebook. Yes, the stock dropped early, but it’s starting to bounce back. If, or when, Facebook cruises past $38 a share, all the damage of the flopped IPO will be forgotten.
To continue Weiner’s marriage analogy, they say rain on your wedding day is supposed to be a good luck. Perhaps for Facebook, its soggy IPO will turn out to be a good omen.
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