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By Jason Stipp | 05-19-2011 04:22 PM

Five Surprises and What They Mean for Investors

Morningstar markets editor Jeremy Glaser unpacks the LinkedIn IPO, changes atop the IMF, a negative surprise at HP, and more.

Jason Stipp: I'm Jason Stipp for Morningstar, and welcome to the Friday Five.

The market was full of surprises this week, and not all of them were good ones.

Here with me to dig into the details is Morningstar markets editor Jeremy Glaser.

Jeremy, thanks for joining me.

Jeremy Glaser: Jason, thanks for having me.

Stipp: What you have for the Friday Five this week?

Glaser: This week, we'll take a look LinkedIn's IPO, at changes at the top of IMF, at the United States' hitting the debt ceiling, at HP's disappointing quarter, and finally, some movement on the New York Stock Exchange merger deal.

Stipp: So the IPO of LinkedIn, I don't think it was a big surprise there was a lot of interest in it, but there was a big surprise just how much interest there was. Can you tell me a little bit about your take on that?

Glaser: We were definitely expecting investors to be excited about this IPO. It's the first of the major social networks to go public. We've looked at private transactions for things like Facebook and Twitter that have seen just incredible valuations put on those businesses. And LinkedIn itself had raised its offering range from about $35 to $45, and people thought, there'd be some pop. But when it came to market on Thursday, there was actually a 130% rise in the share price at some points during the day, which is just really unbelievable for an IPO to have that kind of performance out of the gate. We haven't seen that since really the height of the tech boom, and it just shows how impatient investors are to get a piece of the action of these social networks. They see them as really important pieces of the web going forward. They think there's a lot of money to made there. We think the valuation is completely out of control. Our analyst Rick Summer comes up with a $27 fair value estimate, and that has some very explosive growth baked into it. We think it's quite overvalued at this point and just another sign that the Tech Bubble 2.0 is alive and well.

Stipp: Another big surprise this week are the details of the Dominique Strauss-Kahn case. Those details are grabbing a lot of headlines, but there could be some broader implications for the IMF and for Europe. What are you seeing there?

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