LinkedIn shares slump after insider sell-off
Silicon Valley is hoping a wave of newly minted millionaires will pump up the local economy with purchases of houses, cars, designer clothes, you name it.
Restrictions on selling stock are lifting for insiders. The first Internet company to generate some serious wealth for early investors and employees is LinkedIn. Insiders are typically prohibited from selling shares for six months after an IPO.
But LinkedIn isn't meeting with the same kind of euphoria on Wall Street.
Its shares have sunk to the lowest level since June as insiders sell off stock for the first time since the professional networking company went public in May.
The concern: LinkedIn, which floated a small percentage of its shares in the IPO, is now trading at an unrealistic valuation.
Shares in LinkedIn fell below $70 on Tuesday. LinkedIn has fallen 23% since early November when it said it would sell additional stock in a secondary offering.
LinkedIn's IPO was the biggest for an Internet company since Google's in 2004. The stock more than doubled on its first day of trading.
-- Jessica Guynn
Photo: Reid Hoffman, co-founder and chairman of LinkedIn Corp., left, and Jeffrey Weiner, chief executive officer of LinkedIn, center, stand with traders on the floor of the New York Stock Exchange on May 19, the first day of trading. Credit: Michael Nagle / Bloomberg