LinkedIn LinkedIn is ready to cash in on its high-flying stock. The professional social network filed documents with the SEC revealing plans to raise about $1 billion in a share offering in order to strengthen its balance sheet, as its stock trades near all-time highs. Regardless of the big offering, control of the company remains deeply concentrated in the hands of co-founder and Chairman Reid Hoffman, who will still hold nearly 60% of voting power after the offering.
LinkedIn is offering 4.166 million shares in a secondary offering, which should net the company about $1 billion given the stock's closing price on August 30, when it changed hands for $240.04. Lead underwriter JPMorgan and its peers will have 30 days to decide whether to buy up to 15% more of common stock, form S-3 filed with the SEC showed.
Management has no specific intention behind raising capital, rather, it is looking to bolster its financial position, probably taking advantage of an impressive run in the stock; shares in LinkedIn have gained more than 110% this year and have more than quintupled since their 2011 stock market debut.
Despite recent declines in the face of possible military intervention in Syria and the slowing rate of Fed asset purchases, U.S. stock markets remain well into positive territory this year, with the S&P 500 hitting record highs about a month ago. LinkedIn, therefore, has joined other ourperformers in taking advantage of the year's impressive performance for risk assets.
Back in May, Tesla, which is up more than 375% this year, raised nearly $1 billion selling shares and convertible notes. Billionaire founder and CEO Elon Musk even doubled down on his company, raising his stake in Tesla, as my colleague Steve Schaefer reported. Yet neither of the two high-profile offerings crack the top twenty list, which includes Thermo Fisher and Valeant Pharmaceuticals, both of which raised more than $2 billion, according to market intelligence firm Ipreo. To make it in, LinkedIn will have to raise more than the $1.12 billion raised by LyondellBasel in early August.
Like Tesla, LinkedIn's offering comes after a solid performance in recent quarters. LinkedIn beat Wall Street's consensus estimates for both revenue and profit in the second quarter, raising guidance and noting a 37% increase in members to 238 million in early August, helping boost its stock further. Unlike Facebook, LinkedIn has seen its shares consistently gain since going public in 2011, and like Mark Zuckerberg's social network, management is concerned over margin erosion as traffic moves to mobile devices. Also mimicking their social networking cousin, LinkedIn will see control of the company remain well in the grip of co-founder and Chairman Reid Hoffman, who will hold 59.3% of voting power after the offering.
For the moment, though, they will bask in the glory of a skyrocketing stock price and continued quarterly success. The stock, which had gained 2.5% in normal trading hours, receded 2.2% to $240.78 in post-market trading in New York.