So LinkedIn.com is coming public and hol…
So LinkedIn.com is coming public and holy cow is the mainstream media hyping the heck out of it. Every major news outlet is breathlessly explaining how the IPO was originally priced in the low $30s last week, then upped to the mid $40s earlier this week and how it priced at the highest end of that range last night. And now it’s opening up trading at $80 plus per share today. And every single article, new commentator and/or pundit immediately then starts debating whether this frenzied example of the barrage of IPOs hitting the market is indicative of a new bubble.
Since DJIA 8k or so, a couple years ago, I’ve been predicting that we were finally about to enter what I have long called an “echo tech-o bubble”. The idea was that as a result of the Fed’s easy money policies, fiscal spending binges in the name of stimuli, and a new tech spending boom fueled by apps, smartphones, tablets and clouds, would all combine to push us into a new tech stock market bubble.
The DJIA is up some 50% since I’ve started investing my time, money and reputation on this coming echo tech-o bubble, and many of the stocks I’ve been highlighting as the best plays on this revolution are up double and triple over the same time period.
Last year, I often wrote that 2010 was probably setting us up a lot like 1997 or 1998 did, when the tech IPO boom really started kicking in and the Fed’s free money policies out of fear of a downturn and then a potential Y2K disaster funneled huge money into companies coffers. When all those early IPOs started popping and making investors think they were gonna be rich beyond their wildest dreams, (think LinkedIn today and RenRen last week) and all that money that all those companies raised started being thrown around on new technologies, new servers, new software, new websites, new apps…well, we did eventually enter a bubble.
It was four years after and 300% move later in the Nasdaq from the time idiots like Alan Greenspan (think of the pundits warning you of a new tech bubble already existing right now) were warning people in 1996 that stocks had entered a period of “irrational exuberance”. Of course by the top of the bubble, Alan had reversed himself and argued that there was no tech stock market bubble.
A few weeks ago when Chinese social network site RenRen had its IPO, I wrote an article about how I wouldn’t touch it with a ten foot pole, but that there were some great investment opportunities arising from such IPOs anyway. And it’s the same dynamic today with LinkedIn.com, which while I’m not going to chase at $80 a share the day it comes public, is a great company and in coming years will probably grow into this $8 billion valuation the market is now giving it.
But the best way, the only way, to really profit on the scores of companies coming public this summer is to buy the companies that sells them the technological picks and shovels of the 21st century. That means sticking with stocks like Adtran and Riverbed.
As I wrote yesterday about those two stocks:
I first started flagging Adtran for subscribers back when it was almost exactly half of the price it is right now. The stock has come down from $47 a couple months ago and has been trading in the very high $30s to the low $40s since. The company is scrambling to meet demand from carriers who are scrambling to meet demand from wireless customers who demand much more bandwidth than they can currently get.
Adtran’s been trading a bit like a lesser volatile version of Riverbed, which I first started flagging for readers when it was 1/3 today’s price and which is also scrambling to meet demand from customers who are scrambling tom meet demand from enterprise customers who demand much more bandwidth than they can currently get in their private networks.