LinkedIn looks to sell $1B in stock to fuel growth

There are no definite plans for the money, but it could be used for expansion and acquisitions

Financial trends and news by Steven Loeb
September 4, 2013
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For all of its success LinkedIn is still the little guy in the room when it is stacked against companies like Google, Apple Facebook and Yahoo, at least when it comes to cash on hand. So the company is now looking for a big payday, and is using its rising stock price to get it. 

The social network is looking to sell off $1 billion in stock offerings, according to a filing with the Securities and Exchange Commission on Tuesday.

The company is selling 4,165,972 shares of Class A stock at the price of $240.04 per share, the stock's closing price on August 30th, 2013. The transaction would leave LinkedIn with 116,069,532 shares of Class A and B stock.

The banks that are underwriting LinkedIn, including J.P. Morgan, Morgan Stanley, Goldman Sachs, Bank of America Merrill Lynch, and Allen & Company LLC have the  have the option to buy up to 15 percent of the offered shares in addition. That could mean up to 624,895 shares, or roughly $150 million.

So why do this now? As the company noted in the filing, it does not actually need the money right now, and it won't even use it for the next year.

"Based on our current cash and cash equivalents balance together with cash generated from operations, we do not expect that we will have to utilize any of the net proceeds to us of this offering to fund our operations during the next 12 months.”

LinkedIn will need that cash to expand its businesses, and perhaps pick up some startups to help it edge out the competition in the social networking space. 

While it made sure to note that it could not "specify with certainty all of the particular uses for the net proceeds" the company did offer up a few potential uses for the money, including expanding its product development and field sales organizations, international expansion, general and administrative matters and capital expenditures, including infrastructure."

The company also said that "a portion" of the money raised could go toward an acquistion "although we have no present commitments or agreements to enter into any acquisitions or investments."

Since going public in 2011, LinkedIn has, amazingly, beat Wall Street expectations in every single earnings report. Since November of last year, LinkedIn's stock has more than doubled, rising to $246.13 a share today, from $106.85.

 In its most recent earnings report, LinkedIn posted non-GAAP earnings per share of 38 cents on revenue of $363.7 million, up 59% from $228.2 million in the year-ago period. Analysts had been projecting EPS of 31 cents a share on revenue of $354 million. 

Shares of LinkedIn rose 2.54%, or $6.09, to $246.13 in regular trading on Tuesday, but fell 2.07%, or $5.10, to $241.03 after hours. 

LinkedIn could not be reached for comment.

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