Stock of the day: LinkedIn

The professional networking site issues more shares to raise cash. Why does it need the money now?

By Motley Fool Investor Beat Sep 4, 2013 3:30PM
Shares of LinkedIn (LNKD) are down on news that the company is issuing $1 billion in common shares. Shareholders seem upset about this, but should they be?

According to Motley Fool Analyst Matt "The Pirate" Argersinger, shareholders' displeasure is understandable, as the issuance of new shares will dilute their own holdings. However, if these investors took a longer-term view, they'd realize that they could actually make a pretty penny from LinkedIn's latest move.

Argersinger thinks that now is the perfect time for LinkedIn to issue more shares -- after all, it's just when a company doesn't need the money that it should be stockpiling it.

By issuing shares, LinkedIn will add to its already sizable cash reserves -- which, coupled with a lack of debt, puts the company in a very strong position to expand. Argersinger thinks LinkedIn could go in a lot of different directions with the money, including expanding internationally and by acquiring smaller social media sites. No matter what the company decides to do, in the end investors are sure to profit from LinkedIn's ever-growing cash hoard.
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2Comments
Sep 4, 2013 4:36PM
avatar
gotta cash out before it goes under
Sep 5, 2013 9:48AM
avatar

Why does it need the money now?

 

Because it's phony and has a ridiculous number of fools believing clique is a real business.

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