LinkedIn’s Early Investors Prepare To Cash In

By: EW News Desk Team   Date: 15 November 2011

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EW News Desk Team

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EconomyWatch, News Desk Team

 

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15 November 2011

LinkedIn Corp’s employees and early backers are said to be ready to sell off more than 6.7 million shares in the social networking firm, so as to benefit from a rapid increase in the company’s market value over the past 6 months.

On Monday, the closing price for LinkedIn's shares stood at $78.49 in the New York Stock Exchange – a 74.4 percent increase from its initial public offering price of $45 per share in May. Potential investors also believe that LinkedIn may still be in its early stages of growth, having attracted more than 135 million members since its inception in 2003.

According to the Associated Press, LinkedIn CEO Jeff Weiner is believed to be one of the parties involved in a mass sale of LinkedIn shares into the market. Weiner, 41, wants to sell around 372,000 shares for a $29 million profit, the most among any of LinkedIn’s management team, though he will still own around 2.3 million shares in the company even after his stock sale is completed.

LinkedIn's co-founder and executive chairman Reid Hoffman, on the other hand, is selling any of his nearly 19 million shares. His stake is currently worth about $1.5 billion. 

The major sellers in the latest stock offering though will be venture capital firms that had invested in LinkedIn before the IPO. Bain Capital Venture Integral Investors, for instance, plans to sell all of its 3.7 million shares that it owns. Greylock Ventures plans to sell around 10 percent of its 14 million LinkedIn shares while Bessemer Venture Partners plans to sell 11 percent of its nearly 4.6 million shares.

Earlier this month, the company also announced that it was planning to sell 1.3 million additional shares to help finance its expansion. The sale aims to raise about $100 million to supplement the $367 million that LinkedIn already had in the bank as of September 30.

The mass stock sales will almost certaintly test investors' faith in the company as the number of LinkedIn shares circulating on the stock market will nearly double once all the sales are complete. Including LinkedIn's fundraising effort, at least 8 million shares are supposed to be sold this time around. In its initial IPO, the company sold 9 million shares.

While LinkedIn reported a net loss of $1.6 million in the third quarter of this year, revenues have more than doubled to $139.5 million as compared to last year, outperforming the $127.4 million average of estimates compiled by Bloomberg.


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