Shares in LinkedIn reached a high of $122.69 in early trading, up 173% on the $45 initial public offering (IPO) price. That valued the company at a staggering $11.6bn, nearly quadruple its estimated value at the beginning of the week.
As the first social network to go public, LinkedIn's share performance is viewed as an indicator of the pent up demand for new internet firms, such as Facebook and Twitter.
However, there are also concerns that this might be creating a similar internet bubble to the one seen in the 1990s, as frantic investors pay hugely inflated prices for stock.
LinkedIn, founded by internet entrepreneur Reid Hoffman in 2002, raised $353m with its IPO on Wednesday evening, valuing the firm at $4.3bn. Last week, the company said it was only expecting to raise $175m with the IPO after offering 7.8m shares at $45 each.
The company's flotation is the highest valuation of a US internet firm since Google went public in 2004. LinkedIn has about 100m users worldwide and generated revenues of $243m in 2010, delivering a profit of $15.4m. At $8.3bn, the company's valuation is 35 times its 2010 revenues.
LinkedIn's listing is expected to trigger a surge of multi-billion dollar flotations of social media companies, including online discount business Groupon and Farmville maker Zynga.
Michael Yoshikami, chief investment strategist at wealth management firm YCMNET Advisors, told the Financial Times that LinkedIn's "very rich" valuation was "reminiscent of the year 2000 exuberance".
He added: "To some extent, investors are buying LinkedIn because they cannot get into Facebook. People are just really desperate to get into social media."
Jeffrey Weiner, LinkedIn's chief executive, told the newspaper that the company's long-term goal is to remain independent and take advantage of "huge opportunity ahead of us".
He said that while LinkedIn may not have the same frequency of usage as Facebook, he feels that the company can generate more value for each user.
Weiner added: "We are not focused on time spent on the site. We want users to engage with the site in a way that creates more value for all of our customers."
LinkedIn's valuation constitutes $100 per user, considerably more than Skype, which was acquired last week by Microsoft in an $8.5bn deal, at just $13 per user.