LinkedIn Wants More Cash, Offers to Sell $1.15B Worth of Stock

http://allthingsd.com/20130903/linkedin-wants-more-cash-offers-to-sell-1-15b-worth-of-stock/

by joshuaxls • 13 years ago

34 46 13 years ago

allthingsd.com

peterjancelis• 13 years ago

At a P/E of 935, I would also sell all the shares I could.

http://finance.yahoo.com/q?s=LNKD

arbuge• 13 years ago

I came here to say this. When the market places a crazy value on your stock price, it behooves you to take advantage if you really have a fiduciary duty to maximize shareholder value.

Same principle as buying up your shares on the cheap if the market beats them down unwisely.

rthomas62• 13 years ago

So... why would it be a bad idea to short the stock now? Somebody talk me out of it before I make an expensive mistake.

taway2012• 13 years ago

This is why: the market can stay irrational longer than you can stay solvent.

https://duckduckgo.com/?q=The+market+can+stay+irrational+lon...

pbreit4• 13 years ago

Shorting excellent companies that make lots of money is generally a bad idea.

MichaelGG3• 13 years ago

Heh, I had the same idea and lost a bit (if I had a proper account I woulda made enough on the volatility but that's another issue). A year ago I'd have though that by late 2013 LNKD'd would have fallen.

Look what happened last month. P/E insane, stock at $200. LNKD releases decent numbers ("as expected, LNKD exceeded expectations"), and the market decides "yeah let's just keep that P/E at the same spot".

As someone else wrote, the market can stay irrational longer than you can stay solvent. Maybe if LNKD releases a "met expectations" or "missed by 1%" people will realise a 900+ PE is ridiculous and it'll tank.

Meanwhile, LNKD would be idiotic to not sell off some more shares.

dangoldin• 13 years ago

You can consider buying a put option as a form of a short. The problem there is you need to deal with the likelihood of your option expiring worthless. But your downside becomes limited.

mathattack3• 13 years ago

I was thinking similar. It would take a LOT of earnings to come up with the cash that selling that equity would provide. (3-4 years of forward earnings, 30-40 of trailing, unclear on cash)

acchow• 13 years ago

Absolutely. When choosing between network effects vs. data, I will invest in a data company every time. Data seems to pay off in totally unforeseeable ways far into the future.

Take, for example, YouTube. Google paid $1.65bn for a company that didn't have a way to make money, but it generates massive amounts of human-labelled data. Now, a decade later, with Google's distributed artificial neural net, YouTube is granting Google sight. Google can see.

Yes, this is proof by anecdote - makes me cringe too. But bet on data. You can make lots of money.

diziet• 13 years ago

In the case of LinkedIn, the company is both a network effect & data company.

lifeisstillgood4• 13 years ago

All I can think of is walled gardens need upkeep

LinkedIn is the most amazing business node graph out there - for a professional person online it has everybody and uptodate. But there is a wafer thin business model if they played their hand brilliantly - and they play it like a drunk Captain Hook trying second dealing in Vegas.

I just hope that when / if it all collapses we can club together and transfer out the edge connections.

Apocryphon• 13 years ago

Don't they have a more cohesive and profitable business model than Facebook?

veemjeem• 13 years ago

Even Facebook has a better model as their P/E ratio is only 200 or so.

xutopia• 13 years ago

Can you explain what you mean? It's not obvious to me from my perspective.

dredmorbius• 13 years ago

If you build a closed ecosystem, you and you alone are responsible for its value. As with other forms of leverage, you win on the upside, but there's also a lot to lose going down. LinkedIn is a closed, walled garden. It's gotten increasingly obnoxious (enough so that I've pared my legitimate profile down to its bare bones, and have a spoof one I use for research). And, well, we've seen any number of walled gardens implode spectacularly.

Logged into MySpace recently?

unono• 13 years ago

Could linkedin use it's data for nefarious purposes? Yes.

Could some professionals ask to be compensated for being on the network? Yes.

Have the professionals on linkedin realized the above? No.

namenotrequired• 13 years ago

I'd be very careful to buy stock at LinkedIn. I'm not surprised there's high engagement as LinkedIn is full of dark patterns designed to drive engagement but this is bound to backfire sooner or later, many of which I'm sure you've all read about here already if not experienced. There are only so many frustrations users are willing to put up with.

seiji• 13 years ago

Stop giving them your money. Let them collapse like capitalism intends.

minimax• 13 years ago

Does this dilute existing LinkedIn shareholders?

swr• 13 years ago

Yes. According to the prospectus[1] 4,165,972 shares new shares are being issues raising the outstanding Class A shares to 97,732,877.

This is part of the reason there was a bit of a sell off after the announcement.

[1] http://www.sec.gov/Archives/edgar/data/1271024/0001047469130...

xxpor4• 13 years ago

Mathematically, their price should go down exactly (due to this announcement) (1 - Old # of outstanding shares / New # of outstanding shares)%

Pxtl• 13 years ago

LinkedIn is doomed the moment real competition appears. People only use it while grimacing with disgust.

EGreg2• 13 years ago

Why? I like it.

BlackDeath3• 13 years ago

I'm curious about this as well. I don't use the site, but I see a lot of hate toward it (much of it seemingly unexplained).

ser0• 13 years ago

I agree, I think LinkedIn's value for network participants is very low. For someone trying to find information it is even lower. The one useful thing I see from it now is that it helps confirm someone's claim that they worked somewhere; through checking of people in their network.

However, things like promoting of skills, constant 'do you know ...' emails, and other meaningless profile building tasks that results in engagement with the website, appears to be little more than an exercise in cheap self promotion.

Perhaps I'm not the intended audience, but I find that marketing types tend to be the most active users on LinkedIn. What that says about the nature of the service, I'm not too sure at this point.

mathattack3• 13 years ago

I think it's a great product. I check it before every business meeting.

porsupah• 13 years ago

I can only agree. Specifically, their job recommendations repeatedly insisted (until I finally got around to muting them) that because I'd had a job in a particular city some years ago, clearly that made me an ideal match for positions in entirely different fields.

Seriously, if your company's raison d'etre is employment, and you're giving equivilancy to a long-ago location as to someone's actual field of expertise.. I'm, generously, hoping things improve.

For many people, jobhunting can be a soul-crushingly tedious, utterly unrewarding experience, and LinkedIn's seemingly unaware and uninterested, preferring self promotion with all the inerrant accuracy of AdWords.

lifeisstillgood4• 13 years ago

But it is the very definition of a network effect - I think competing with it is a hiding to nothing - I suspect that the best approach is to commoditise it - one of its plugins will become so popular that it essentially takes over simply using the LinkedIn API as a convenient backend

crazypyro• 13 years ago

Were people not saying this about facebook once?

LinkedIn Wants More Cash, Offers to Sell $1.15B Worth of Stock

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