Jim Cramer Calls LinkedIn IPO Action A Sham (LNKD, TST, MHP, SAP)

If anyone can cause a controversy on Wall Street it is Jim Cramer.  In late-afternoon trading today Jim Cramer was blasting the LinkedIn Corporation (NYSE: LNKD) post-IPO trading as a sham.  His thesis is the same as many that this offering would not have such a high premium value had the company actually unloaded more shares than this tiny float it sold today.

Before thinking that Cramer was just being so self-serving, he even compared this to the valuation of his own TheStreet.com, Inc. (NASDAQ: TST) when it came public over a decade ago and after it had the same sort of offering.  He even claims that he called Goldman Sachs and begged them not to do that during his IPO.

After TheStreet opened and was trading north of $50 for a very short period, it then plummeted.  Shares were killed during the dot-com and tech bubble implosion.  Now, TheStreet trades close to $3.20.

LinkedIn raised its offering price by 30% this week, but it did not raise its share count.  By selling only an 8% float in the stock, there is only a tiny sliver that is public.  That is one crazy valuation.  The opening price was $83.00 today and the quote systems show that a high price of $122.70 was hit.  With just over an hour of trading, shares are now around $103.00 per share and that gives LinkedIn a market cap of roughly $9.5 billion.

We would note that two holders are The McGraw-Hill Companies, Inc. (NYSE: MHP) and SAP AG (NYSE: SAP), but McGraw-Hill shares are down marginally and SAP’s shares are only up 0.3%.  If this value was going to last then we would expect to see it here.

After the deal price was hiked in LinkedIn, we ran a poll.  More than 50% of the respondents at the time said that the deal was already priced too high. Another 19% or so said that $42 to $45 would be the top, and only 13% predicted it would be worth more than $60.00 per share.

JON C. OGG