LinkedIn looks to raise $1.2 billion for expansion
The professional networking site will sell 5.4 million of its common shares to raise capital, with plans to invest it in product development and international growth.
By Zacks Equity Research
Professional-networking behemoth LinkedIn (LNKD) is set to raise $1.2 billion by selling 5.4 million of its common shares at a price of $233.00 per share. The secondary offering is expected to close on Sept. 10.
JP Morgan (JPM) and Morgan Stanley (MS) will be the lead bookrunning managers while Goldman Sachs (GS) and Bank of America Merrill Lynch (BAC) will be the joint bookrunning managers. Allen and Co. will act as the co-manager of the proposed capital-raising by LinkedIn. These financial institutions have the option to purchase another $150 million of common stock from LinkedIn.
LinkedIn stated that the proceeds would enable the company to invest in product development and international expansion.
The current capital raising initiative from LinkedIn comes at an opportune time as the company has been performing well over the past few quarters. LinkedIn had $873 million in the form of cash and cash equivalents and short-term investments as of June 30. Moreover, the company generated a healthy operating cash flow of $124.2 million in the last quarter, which was up significantly from $46.9 million in the year-ago period.
Although the stake sale would dilute the company's earnings, it would definitely help it pursue growth opportunities. In its last-reported quarter, the company posted better-than-expected results with the top and bottom lines, beating the Zacks Consensus Estimate. All of its business segments did well. Moreover, the company has provided a positive outlook for the fiscal year.
Additionally, the company's expansion in the mobile arena by launching new apps for Apple's (AAPL) iOS and Google's Android is a positive. Considering the strong outlook and business performance, the company should have no problems raising the proposed capital.
Additionally, LinkedIn's shares have had an outstanding run since its listing in May 2011. To date, LinkedIn's shares have risen 156.7% while year-to-date the shares have risen 112.1%. So, apart from the company's strong business fundamentals, the sheer upside potential in the stock price should attract investors.
Currently, LinkedIn carries a Zacks Rank #2 (Buy).
More from Zacks.com
- LinkedIn (LNKD): Free stock analysis report (email required)
- Comprehensive guide to homebuilder ETFs
- Read this before your next trade
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
These hot movers could rise by double digits in coming months.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.