NEW YORK — Shares of LinkedIn ended down 2.9% Wednesday as investors
reacted to the online career networking site's decision to offer $1
billion in new stock in a secondary offering.
The announcement, which came after the close of trading Tuesday, stressed that the purpose of issuing new stock was to raise additional money to increase the company's "financial flexibility" and to "further strengthen its balance sheet."
Arvind Bhatia, an analyst at Sterne Agee, says that LinkedIn's move was "opportunistic," and likely driven by "favorable market conditions" and its "strong stock performance" this year.
MARKETS: How stocks are performing Wednesday
Shares of LinkedIn, which closed at $246.13 on Tuesday, are up 108.1% in 2013 and hovering just beneath its 52-week high.
Back in May 2011, the stock's initial public offering price was $45, and more than doubled on its first day of trading, raising nearly $353 million, according to the New York Stock Exchange. The new offering will raise nearly three times the amount of cash. The world's biggest professional-networking site has not priced the secondary stock offering yet, but estimates it will raise about $1 billion based on the Aug. 30 closing price of $240.04.
LinkedIn says it intends to use the cash proceeds of the stock sale for general purposes, such as expanding its product offerings, expanding its operations internationally as well as using the money for "potential strategic acquisition."
Bhatia notes that since no specific acquisition was tied to the stock offering, it appears the timing of the capital raise was "opportunistic," given favorable market conditions.
Still, putting more shares on the market "dilutes" the ownership stake of existing shareholders and will negatively impact the company's earnings per share calculation. The company's earnings will now have to be divided by a larger number of shares, which will reduce its so-called EPS.
The new offering will total about 4.2 million shares, which would increase the number of shares outstanding, currently 116.6 million, by about 4%, says Bhatia.
SOURCE : http://www.usatoday.com/story/money/markets/2013/09/04/linkedin-announces-secondary-stock-offering/2761533/
The announcement, which came after the close of trading Tuesday, stressed that the purpose of issuing new stock was to raise additional money to increase the company's "financial flexibility" and to "further strengthen its balance sheet."
Arvind Bhatia, an analyst at Sterne Agee, says that LinkedIn's move was "opportunistic," and likely driven by "favorable market conditions" and its "strong stock performance" this year.
MARKETS: How stocks are performing Wednesday
Shares of LinkedIn, which closed at $246.13 on Tuesday, are up 108.1% in 2013 and hovering just beneath its 52-week high.
Back in May 2011, the stock's initial public offering price was $45, and more than doubled on its first day of trading, raising nearly $353 million, according to the New York Stock Exchange. The new offering will raise nearly three times the amount of cash. The world's biggest professional-networking site has not priced the secondary stock offering yet, but estimates it will raise about $1 billion based on the Aug. 30 closing price of $240.04.
LinkedIn says it intends to use the cash proceeds of the stock sale for general purposes, such as expanding its product offerings, expanding its operations internationally as well as using the money for "potential strategic acquisition."
Bhatia notes that since no specific acquisition was tied to the stock offering, it appears the timing of the capital raise was "opportunistic," given favorable market conditions.
Still, putting more shares on the market "dilutes" the ownership stake of existing shareholders and will negatively impact the company's earnings per share calculation. The company's earnings will now have to be divided by a larger number of shares, which will reduce its so-called EPS.
The new offering will total about 4.2 million shares, which would increase the number of shares outstanding, currently 116.6 million, by about 4%, says Bhatia.
SOURCE : http://www.usatoday.com/story/money/markets/2013/09/04/linkedin-announces-secondary-stock-offering/2761533/
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