Shares of LinkedIn, a Mountain View, Calif., company, which operates a professional online network with more than 100 million members, are expected to begin public trading on the New York Stock Exchange (NYSE) May 19 under the ticker symbol LNKD. Today’s Wall Street Journal (wsj.com) reports details of the IPO.
The company expects to offer 7.84 million shares for $32 to $35 a share. With total Class A and Class B common shares outstanding of 94.5 million, LinkedIn will carry a market capitalization of about $3.17 billion, based on an average estimated IPO price of $33.50 a share. LinkedIn estimated its proceeds should be approximately $146.6 million, assuming an IPO price at the midpoint of the range, which will be used primarily for general corporate purposes, including working capital, sales and marketing activities, general and administrative matters and capital expenditures.
LinkedIn has said it has three revenue streams, including advertising, premium subscriptions and hiring solutions for human-resources managers who tap its database. Still, analysts are puzzled about LinkedIn’s estimated valuation since there is no real precedent for public market valuation of a social networking firm. The company is considered a pioneer among highly regarded social-networking sites to go public, meaning there aren’t any true comparisons to gauge the company’s value.
A rich valuation isn’t likely to hinder the momentum LinkedIn has been building since the beginning of the year when the offering was announced, David Menlow, president of IPOfinancial.com, said. “Everybody’s looking for the next pre-IPO transaction from a social networking site to say the market has been overvalued or not,” Mr. Menlow said. “It’s a throw back to what was going on in the Internet days,” more than a decade ago.
LinkedIn operates in more than 200 countries and territories. It generates revenue by selling its hiring and marketing software offline, and from members who subscribe to its premium services. LinkedIn showed strong membership and top-line revenue growth throughout the economic downturn, and posted a 2010 profit of $15.4 million following operating losses from 2007 until 2009.