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LinkedIn slumps on secondary news

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LinkedIn slumps on secondary news

Shares on LinkedIn (NYSE:LNKD) are lower by more than 2% early in in Wednesday’s session as the market reacts to some big news following yesterdays close. On Tuesday, during the after hours session, the company announced it would be pursuing additional capital through the sale of an additional $1 billion of its Class A common stock. While not all of the details surrounding the deal have been released, the company has made it clear the additional funds will be directed at additional growth opportunities. LinkedIn, which had roughly $900 million in cash and short-term securities at the end of June, plans to use the capital infusion for acquisition as well as platform upgrades.

The announcement comes at a good time for shareholders, shares have moved to the upside by over 114% this year alone. According to a prospectus filed after the close, the offering would sell about 4.2 million shares, giving the company a total of roughly 116 million shares outstanding of Class A and Class B stock. In a statement following the filing, management was clear stating the funds will be used for “solutions or businesses that complement our business, although we have no present commitments or agreements to enter into any acquisitions or investments,”.

The entire social media space has been hot as of late, seemingly everything with exposure has caught a bid. This news follows what was a strong second quarter just last month. Revenues from the company’s recruiting tools increased 69% from a year earlier to $205.1 million. Moreover, its marketing solutions business, popped 36% to $85.6 million. Some traders on the street have already started to speculate the capital from the acquisition may be used to grow its marketing solutions business segment. In the coming weeks we should receive more clarity into the timeline of the transaction.

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