All ships rise with the tide and close to the same is true when you are a company associated with a hot stock. Today on CNBC mobile and social gaming company Glu Mobile (GLUU) was mentioned in a conversation about LinkedIn. Guess what happened? GLUU moved from around $3.8 per share to over $4.20 a share in a matter of minutes.
On a side note…What the heck happened? LinkedIn gets priced at $45 per share by the institutions and then opens up in the high $80’s? Talk about mis-priced! The company could have nearly doubled the amount of capital they received from their IPO. That is the past though.
What I would keep in mind about the LinkedIn IPO…It’s going to be interesting to see how strong the hype is with the social networking business concept and investors. We’re being told it’s very strong and that this is a relapse of the Internet bubble of over a decade ago.
In the coming days and weeks investors that were able to buy LinkedIn at the $45 IPO price and investors that gained positions within the company prior to the company going public are going to have a strong incentive to sell. The ROI is high. Will this selling dampen the price? Or will the social media hype outweigh that force and push the stock’s price up?
One thing we learned today is that the market’s hunger for these social media darlings of the Internet is very real and very strong. The question for long-term investors is can these companies live up to the hype?