Breaking Wall Street Market News & Reports

Earlier Monday of May the 9th, in an amended regulatory filing, LinkedIn said it plans on offering about 7.84 million shares, at a price ranging from $32 to $35 a share, valuing the company at more than $3 billion on May 19.  About 4.83 million shares will be offered by the company, which should garner anywhere from $154 million to $169 million from the IPO, based on this current price range. Analysts expect the offering to be priced sometime next week. LinkedIn will trade on the New York Stock Exchange under the symbol “LNKD.” Lead underwriters on the deal are Morgan Stanley, Bank of America Merrill Lynch and J.P. Morgan. The underwriters will be able to purchase an additional 1.176 million shares to cover over-allotments.

The three investors are selling their entire stakes. Goldman Sachs Group Inc., which also has made a big bet on Facebook Inc., is selling its entire stake of 871,840 shares; McGraw Hill Cos. is selling all of its 435,920 shares; and SVB Financial Group, a financial-services firm, will sell all of its 70,365 shares. Executives and board members are selling a total of 387,170 shares in the offering. Chairman and co-founder Reid Hoffman and CEO Jeffrey Weiner are each selling 115,335 shares in the offering, worth at least $3.7 million at the lower end of the offering range. That makes it a total of 1,765,295 shares that will be sold back into the market. That doesn’t even include employees or other small investors that plan to follow suit. Appreciate the disclosure, but this does not bode well.

LinkedIn generates revenue both from corporate customers who use its’ hiring solutions and from users who subscribe to its premium services, though basic membership remains free of charge. The company said it had 2010 revenue of $243 million, double that of the prior year, while it swung to a full-year profit of $15.4 million, compared with a year-earlier net loss of $3.98 million.

For the quarter ended March 31, LinkedIn said revenue jumped 110% to $93.9 million while earnings climbed 16% to $2.1 million. Operating expenses surged 123% to $92.65 million in the March quarter. Operating expense surge over 100% is a no-no. That may be amounted to 100% hiring spree from 500 employees to 1,000. In a government filing, LinkedIn warned that it expects its revenue growth rate to decline and its costs to rise as it ramps up hiring and re-invests in the business, and that it will lose money this year. It cautioned that it “may not be able to generate sufficient revenue to sustain our profitability over the long term.” LinkedIn makes money selling members premium subscription services, and hiring and marketing services.

The debut of the social network for professionals founded by ex-PayPal executive Reid Hoffman values the nine-year-old firm at $3 billion. At about 12 times 2010 sales, its IPO is cheap compared to 78 times for Renren, the Chinese site often likened to Facebook. Companies including Twitter, Groupon and Zynga have stoked heavy interest from investors betting on social media only getting hotter. Their shares, traded in markets for private investors, are commanding multi-billion-dollar valuations. Last week, Renren Inc, one of China’s biggest social networking companies, rose 29 percent in its debut on the New York Stock Exchange. In contrast, Renren’s shares are trading at slightly more than 78 times the estimated annualized sales for the six months that ended December 31, 2010. Facebook is valued at 35 times last year’s sales. Since then, Renn has given back it’s surge to fall back to it’s $14 offering. The true valuation for RenRen is somewhere around the $10-$12 mark, but we’ll discuss about the markets overheating social network interest at a later time.

LinkedIn is valued at a discount to peers, but as a social network, it is priced several times more than the likes of Google’s and Yahoo’s 4 to 5 times sales. I feel LinkedIn may be limited and constrained to how Profitable it can be in its current business model.

LinkedIn Facts

• The site officially launched on May 5, 2003. At the end of the first month in operation, LinkedIn had a total of 4,500 members in the network.
• Roughly one million new members join LinkedIn every week, at a rate equivalent to a professional joining the site faster than one member per second.
• The company is privately held and has a diversified business model with revenues coming from user subscriptions, advertising sales and hiring solutions.

• LinkedIn operates the world’s largest professional network on the Internet with more than 100 million members in over 200 countries and territories.
• More than half of LinkedIn members are currently located outside of the United States.
• There were nearly two billion people searches on LinkedIn in 2010.
• Headquartered in Mountain View, Calif., LinkedIn also has U.S. offices in San Francisco, Chicago, New York and Omaha, Neb. International LinkedIn offices are located in Amsterdam, Dublin, London, Paris, Sydney, Toronto and Mumbai, India.
• The company’s management team is comprised of seasoned executives from companies like Yahoo!, Google, Microsoft, TiVo, PayPal and Electronic Arts. The CEO of LinkedIn is Jeff Weiner.
• LinkedIn is currently available in six languages: English, French, German, Italian, Portuguese and Spanish.
• LinkedIn started off 2011 with about 1,000 full-time employees located all around the globe, up from around 500 at the beginning of 2010.

Worldwide Membership

• 100m+ professionals around the world as of March 2011
• 20m+ members in Europe as of December 2010
• 5m+ members in the UK as of December 2010
• 1m+ members in France
• 2m+ members in the Netherlands
• 1m+ members in Italy
• 1m+ members in the DACH region (Germany, Austria and Switzerland)
• 1m+ members in Spain
• 9m+ members in India
• 3m+ members in Canada
• 3m+ members in Brazil
• 2m+ members in Australia
• As of April 2011, LinkedIn counts more than 11 million recent college graduates* around the world as members (*LinkedIn defines recent graduates as members who have graduated within the last five years–between 2005 and 2010.).

LinkedIn and Business

• As of January 2011, LinkedIn counts executives from all 2010 Fortune 500 companies as members; its hiring solutions were used by 73 of the Fortune 100 companies as of March 22, 2011.
• More than 2 million companies have LinkedIn Company Pages.
• LinkedIn represents a valuable demographic for marketers with an affluent & influential membership.
• Thousands of developers are using LinkedIn APIs to create innovative tools and services for professionals.

Tags: ipo, IPO's, LinkedIn, LinkedIn IPO, LNKD, NYSE:LNKD, small caps, social media stocks, Social Network, social network stocks, when will LinkedIn IPO

This entry was posted on Tuesday, May 10th, 2011 at 8:58 pm and is filed under Contributors, Facebook feed, Small Cap Stocks, Technology Stocks. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.