Bubble Test

The few who read my February post in which I expressed some doubts about Facebook’s 50 billion valuation might remember that I considered nevertheless somewhat justifiable in the medium term on fundamental's basis.

In the meantime FB’s valuation on grey market doubled to reach an amazing 100 Bio and yesterday Linkedin, the first social internet IPO went public for an amazing USD 4,5 billion quickly more than doubled to USD 10 Billion (24 times Revenues 160 times ebitda and 1100 times profits).

Another less conventional metric to assess Linkedin valuation is a fairly old one known as replacement cost of assets. Linkedin’s main assets being a CV database comprising 100 Mio professionals currently on its record. At current market cap each CV is valued at approximately 100 USD each

An interesting arbitrage opportunity would be to offer each Linkedin’s member 50 USD to copy/paste their Linkedin page into a new website and IPO the second one at a bargain 6 Bio USD… (1,0 bio in my pocket). Assuming that a copy/paste takes around 30 seconds that adds up to 100 USD a minute or an annualized USD 6,3 Mio (on 8 hours working day and 220 working days a year). Quite a productive use of time even for Linkedin’s well paid members :-)

 

 

Comments

[David]

Didn't you just prove the opposite – if it would cost up to $6B try to build up a copy of LinkedIn, then I'd rather just buy a share of the real thing :)

(realistically you could probably build it for less, but building a very uncertain me-too for several $B doesn't seem like a very wise way to spend cash)

d.

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