Stocks follow LinkedIn IPO higher

NEW YORK — The biggest Internet IPO since Google combined with a drop in oil prices to send the broad stock market higher.

Shares of social networking company LinkedIn jumped 109 percent to $94.25 on the first day they began trading on the New York Stock Exchange under the ticker symbol “LNKD.” The debut is seen as a preview of other social networking sites that are expected to start trading during the next year. The list of candidates includes the online messaging service Twitter, game maker Zynga, and the biggest social network of all, Facebook.

“LinkedIn represents the first opportunity for the average investor to participate in what looks like a lasting, powerful trend of social media,” said Lawrence Creatura, a portfolio manager at Federated Investors. “They’re frothy with excitement, and that’s being imputed into the share price.”

LinkedIn finished the day with a gigantic price-to-earnings ratio of 554, a valuation reminiscent of Internet stocks during the late 1990s tech bubble. By comparison, the average price-to-earnings ratio of technology companies in the S&P 500 index like Apple Inc. and Google Inc. is 15.

Sumeet Jain, a principal with venture investing firm CMEA Capital, said LinkedIn’s IPO suggests that the number of mergers and acquisitions will increase this year as social networking companies grow, a potential boon for the stock market.

LinkedIn is “going to have to be quite aggressive” to meet investors’ lofty expectations, Jain said. “All the rest of the companies in the pipeline, when they’re all public companies they will be extraordinarily active acquirers as well.”

The Dow Jones industrial average rose 45.14, or 0.4 percent, to close at 12,605.32. The S&P 500 gained 2.92, or 0.2 percent, to 1,343.60. The Nasdaq composite index rose 8.31, or 0.3 percent, to 2,823.31.

Tags: us business, business, stock, market, linkedin