LinkedIn plans to sell $1 billion in stock

Story highlights

  • LinkedIn said proceeds would increase its financial flexibility and fuel expansion
  • LinkedIn raised $88m in a secondary offering in November 2011, six months after its stock-market debut
  • Mobile is now LinkedIn's fastest growing line of business and accounts for a third of unique visitors

LinkedIn plans to sell $1bn worth of stock in a secondary offering, two years after one of the most successful social-media initial public offerings to date and having seen its valuation more than double so far in 2013.

LinkedIn said proceeds would increase its financial flexibility and fuel expansion, including potential acquisitions.

The company's net cash stood at $873m at the end of June, so the move to raise more cash prompted speculation that it might be gearing up for substantial acquisitions. The company previously acquired Pulse, a mobile newsreader, and SlideShare, an online presentations site, and is investing heavily behind a new content strategy to improve engagement on the site.

The capital raising comes at a time when internet companies' valuations have soared following a strong performance in second-quarter earnings. According to Brian Nowak of SIG, a 63 per cent expansion in US internet companies' price-to-sales multiple is the largest since 2009 and now stands at an average of 5.8 times, the highest in more than seven years.

JPMorgan and Morgan Stanley will lead the offering, along with Goldman Sachs, BofA Merrill Lynch and Allen and Co, who will also be given the option to purchase another $150m of common stock from LinkedIn.

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LinkedIn shares, which closed 2.5 per cent higher on Tuesday at $246.13, fell by 2 per cent in after-hours trading. The company's market capitalisation now stands at $32bn, up from $4.3bn at the time of its IPO.

Its secondary offering will follow that of Tesla Motors in May, another technology company that has taken advantage of a soaring stock price to raise fresh capital.

    Much of investors' new-found enthusiasm for the internet sector has been driven by web companies' promising shift to mobile advertising and transactions, which had been seen as a cause of disruption.

    Mobile is now LinkedIn's fastest growing line of business and accounts for a third of unique visitors. LinkedIn stock's growth in the year to date is second only to Yelp among the biggest internet companies.

    Last month, LinkedIn lifted its guidance for the year after posting 59 per cent revenue growth, beating Wall Street expectations. Membership rose 37 per cent to 238m during the quarter.

    LinkedIn raised $88m in a secondary offering in November 2011, six months after its stock-market debut, as earlier investors and insiders cashed out for the first time since its IPO. On that occasion, the company failed to raise the $100m that it had originally hoped for.