A quick scan of commentary on LinkedIn shows mostly “it’s 1999 again” posts with comparisons to the pets.com of that era. It is as if they see any first-day pop as bubblicious and forget that Netscape had a similar pop well before the dot-com bubble brewed. The LinkedIn IPO looks awfully similar to Netscape, and if anything is less bubblish:
- Netscape was expected to price at $12-14 and instead priced above its range at $28
- LinkedIn was supposed to price at $32-35, instead priced above its range at $45
- Netscape ran to $75 on the first day (2.7x) and closed at $53, about a 2x
- LinkedIn ran to $122.70 on its first day (2.7x) and closed at $94, about a 2x
- Netscape ran up to $171 pretty quickly
- LinkedIn has held up on its second day; we shall see over the next few weeks if it runs
We think it a good sign that the skepticism remains high; in 1995 many did not believe a new boom was on, but by 1999 they no longer called it a bubble. That marks a real bubble! We also find it funny to think we can get to “1999” on one IPO without going through the boom first.
My view of the LinkedIn IPO pop is that it reflects neither a bubble nor a one-off, but the depth of the pent-up demand for tech IPOs that has been suppressed over the past decade by Sarbanes-Oxley and the over-reaction to the dot-com bubble (eg. the demonization of stock options). We have seen the swirling desire for getting into the Social IPO candidates in the robust SecondMarket trading.
Could it be the Netscape Moment? The Netscape IPO in 1995 rang the bell on the dot-com boom. Every since VCs have waited for the next bell-ringer. A few insiders have made the comparisons to 1995, notably this article and chart from Business Insider. You can see what a real bubble looks like: the Nasdaq doubled in the final six months into 2000, in the parabolic signature of a bubble market.
We won’t know until we see how the next few Social IPOs do, especially Groupon later this summer. It is clear, however, that the two communities at the center of the social-mobile web (NY and SF) are feeling the excitement grow. The super-angels funds that are focused on this space are seeing how many of the Social IPO candidates are showing really stunning revenue growth, which distinguishes them from the pets-com of 1999. When the next few go public and that growth is revealed to the public investor, we should see if the real Netscape Moment stands up.