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Case
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Reference no. 9-112-006
Published by: Harvard Business Publishing
Originally published in: 2011
Version: 6 January 2012
Length: 37 pages
Data source: Published sources

Abstract

The purpose of this case is to help students critically evaluate the market value of LinkedIn's stock following its recent IPO. In the context of strong investor appetite for social media companies, LinkedIn is the lamp bearer among US companies in that industry that are considering tapping into public markets. The case can serve to illustrate the challenges of valuing an early-stage high-growth company with a great deal of uncertainty about fundamental value and how quoted prices might reflect expectations that are hard to justify. Regardless of which valuation method is employed (eg, residual income, discounted cash flow, multiples), the case provides a platform (i) to map the firm's key success and risk factors into forecasts and estimates for its future performance and cost of capital and (ii) to critically assess the implied assumptions underlying the market's expectations. The case is best suited for a course on business valuation at all levels (undergraduate, MBA, executive programs).
Location:
Size:
1,000 employees, USD243 million revenues
Other setting(s):
2011

About

Abstract

The purpose of this case is to help students critically evaluate the market value of LinkedIn's stock following its recent IPO. In the context of strong investor appetite for social media companies, LinkedIn is the lamp bearer among US companies in that industry that are considering tapping into public markets. The case can serve to illustrate the challenges of valuing an early-stage high-growth company with a great deal of uncertainty about fundamental value and how quoted prices might reflect expectations that are hard to justify. Regardless of which valuation method is employed (eg, residual income, discounted cash flow, multiples), the case provides a platform (i) to map the firm's key success and risk factors into forecasts and estimates for its future performance and cost of capital and (ii) to critically assess the implied assumptions underlying the market's expectations. The case is best suited for a course on business valuation at all levels (undergraduate, MBA, executive programs).

Settings

Location:
Size:
1,000 employees, USD243 million revenues
Other setting(s):
2011

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