Mad Money

Know Your IPO: Limelight Networks


Don’t believe the hype – but you can make money if you understand it.

Know Your IPO: Limelight Networks

Take Limelight Networks, for instance. The company billed as the next Akamai Technologies comes public next week and the investment community is buzzing. The problem is that Cramer doesn’t think Limelight can live up to the task.

But that doesn’t mean the offering is a washout. Whether or not Limelight overtakes Akamai as the leader in online content delivery is irrelevant. The play here, Cramer says, is the excitement about the company’s prospects. That alone should send the stock much, much higher. Investors just need to take profits when they can, or before the valuation drops back to earth. 

Limelight has great fundamentals, too, so this isn’t blind speculation. It’s in one of the few web sectors that is still seeing rapid growth, and it won’t have much competition because of the huge economies of scale and tall barriers to entry in this space. Goldman Sachs seems confident in the company. It recently invested $130 million in Limelight.

The initial price range for LLNW is $10-$12, and that’s cheap as far as Cramer is concerned. He’d be willing to pay up to $17 for the stock, then look to exit at about $24.

Bottom Line: Limelight Networks comes public next week under the symbol LLNW, and people think it’s the next Akamai. That alone should send the stock much, much higher, if Cramer’s any judge of things. This is a deal he recommends getting in on. Under $17, he’d buy some in the aftermarket.

Jim’s charitable trust owns Goldman Sachs.

Questions? Comments?