On the continuing path to the next internet bubble, last week saw LinkedIn’s float live up to the hype, even though shares dipped on profit-taking last Friday.

Not long ago, Microsoft took over Skype at a horrendous price that raised some questions I outlined here:

In particular, I wonder if Microsoft’s move was smart or desperate, since it might never recover its investment.

Remember how much AOL invested in the Bebo takeover? Then they turned around and sold the company for a song in June 2010…

We have previously pointed out that social networks are profitable to founders who raise a lot of money, but rarely – if ever – to shareholders.

LinkedIn, which allows registered users to build and maintain a network of professional contacts, had about five million users signed up in March 2006 and recently hit 100 million. The first 100,000 of those got a thank-you email from the company:

In early May the company set the price range for its initial public offering (IPO) between US$32 and US$35 per share, which would have raised about US$271 million.

But last week, LinkedIn’s IPO lived up to the hype with a price of US$45 a share, thereby raising US$351 million, before shares soared 173 percent to a value of over US$11.6 billion. Prices have since dropped, but not much.

Bottom line
With the biggest tech IPO since Google in 2004 and the doubling in price of LinkedIn’s flotation shares within a span 24 hours, we clearly seem to be in the midst of a new technology craze. LinkedIn has about 100 million users and turned a profit of US$15.4 million on revenues of US$243 million in 2010.

Chinese social media firm Renren had an equally frenzied debut when it raised US$743 million earlier this month on the New York Stock Exchange. However, late last week its shares dropped below their initial price of US$14.

I think if I had LinkedIn shares I would be partying all weekend. If the public thinks this is what the company is worth, then it is, right?

What do you think about this?