Well this is surprising. Yesterday LinkedIn filed paperwork to bring a secondary offering of as much as $1.15 billion if the full shoe is exercised. Listed under Use of Proceeds: We kinda just want the dough.
Seriously. The company is taking advantage of an extremely liquid market and the fact that their stock has basically been unstoppable since their IPO in 2011. This secondary will raise more than twice what the IPO raised, and the company is giving up less than half the shares.
I know Patrick has been long forever, and I've never really taken a serious look at the stock. I always thought it was overvalued, but what do I know? I finally broke down and bought some AMZN the other day after maintaining the same belief about it for the past several years.
I'd love to hear what you guys think the company is up to. They've already got almost a billion in cash, and now they're raising another billion. I can't help thinking this raise falls into the "Why does a dog lick his balls?" (because he can) category. Which says something bubblicious about the market right now. In more reasonable times I don't think an offering like this would fly.
But I've been wrong about everything else when it comes to LNKD, so I'm probably wrong about this, too. Maybe they're eyeing up some juicy acquisition, though I have no idea who might be appealing to them being that they're already the 800-pound gorilla in the professional networking space.
What do you guys think? Strategic, or just opportunistic?
The market cap of LNKD is now almost neck and neck with Yahoo & their multiples are insane (last time I checked, EV/sales at 15x & EV/EBITDA at 62x). They have no debt and given their so-so return ratios & OPM, it's safe to say they'll remain in acquisition mode & look to expand abroad. My bet remains on the APAC region, where y/y revenue increase was 75%, but only accounted for 8% of total sales (US is 62%). The real question is by how much will they overpay? As we speak, membership growth hit 37% y/y, the first time they've done that since the IPO.
Aquisitions. I'd look at competitors and add on services that LNKD will likely [or try to] buy over the next couple of years. Buy now and then sell when the stocks pop as the aquisitions are announced.
Hate to be a stickler, but I think the term here is "Seasoned Equity Offering". A secondary would be if the CEO were selling his shares.
Well that's certainly churching it up a bit. I'm old school, baby. Any equity offering post-IPO is a secondary (or tertiary, etc...).
From Investopedia:
@Eddie that's what I always thought too when I was working in S&T. People called them "secondaries". (We also call vega a greek letter). But when I used that term with a Morgan Stanley MD who was teaching a corporate restructuring course, I got an earful. They're called seasoned equity offerings or follow-on offerings; you'll never see the term "secondary" in a prospectus.
Wikipedia:
http://en.wikipedia.org/wiki/Secondary_market_offering(Obviously edited by an investment banker, not a salesperson)
I think in most of continental Europe they just call it Capital Increase.
You'll never see "secondary" in a prospectus for the same reason that half of the people on Wall Street are a "Vice President"
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