LinkedIn’s IPO To Test Appetite For Facebook

LinkedIn’s IPO To Test Appetite For Facebook

By Reuters

  • 28 Jan 2011

LinkedIn Corp announced plans to go public this year in what could be a test of investor appetite for social networking websites ahead of a highly anticipated Facebook offering.

LinkedIn announced its intention to go public on Thursday, setting the stage for the company co-founded in 2002 by ex-PayPal executive Reid Hoffman to become the first social network to plant a flag on Wall Street.

But many investors will be watching LinkedIn's IPO to gauge the appetite for Facebook, now valued at $50 billion as the world's most dominant social network, and other Internet IPOs.

"Facebook has definitely escalated people's interest in the sector and I think there's a lot of demand (for more Internet IPOs)," said Rory Maher, an analyst with Hudson Square Research.

The number of shares to be offered and the price range have not yet been determined, according to the form S-1 registration statement that LinkedIn filed with the Securities and Exchange Commission.

Investor interest and valuations are surging for privately held Web companies like Facebook, Zynga and Groupon. LinkedIn revealed its plans a day after newly public Internet company Demand Media Inc saw its shares jump roughly 33 percent in their first day of trading.

Just this week, Groupon Chief Executive Andrew Mason said the company was considering an IPO and was in talks with bankers.

Facebook, the world's No. 1 Internet social network, recently raised $1.5 billion in funding in a deal that valued the company at $50 billion.

Facebook said recently it planned to publicly disclose its financial results by April 2012, a regulatory requirement triggered by the company's number of shareholders and a move that some believe could lead to a public offering.

LinkedIn's net revenue nearly doubled to $161.4 million in the first nine months of 2010, with $1.85 million in profit, according to the filing.

In contrast, Facebook, which has far more users worldwide, had $1.2 billion in revenue in the first nine months of 2010 and $355 million in profit, according to a Goldman Sachs prospectus pitching the company earlier this month to investors.

LinkedIn, which caters to professionals, has 90 million users, compared with the more than 500 million users of Facebook's mainstream social networking service.

Morgan Stanley, Bank of America and JPMorgan are among the book runners for the LinkedIn offering.

A portion of the shares will be issued and sold by the company, while a separate portion will be sold by certain stockholders of LinkedIn, the filing said. No specific details were disclosed.

LinkedIn's investors include Greylock Partners, Bessemer Venture Partners, Goldman Sachs and Sequoia Capital, a venture capital firm that has backed Yahoo, Google, Apple Cisco Systems and Oracle.

(Reporting by Nadia Damouni in New York and Alexei Oreskovic in San Francisco; Editing by Bernard Orr, Gary Hill)