Social networking site aimed at business professionals to lead wave of IPOs at companies such as Facebook and Groupon
LinkedIn, the online service for business professionals, is to go public this year, the first social networking company to float on the New York stock exchange.
The nine-year-old website filed documents confirming its formal intention to go public last night, in a move seen as firing the starting pistol for flotations of other highly valued internet companies, such as Facebook, daily deals site Groupon, and Zynga, the games business behind FarmVille and CityVille.
The number of LinkedIn shares to be offered and their price range have not yet been determined, according to its Securities and Exchange Commission prospectus. But private shares in the company changed hands at an implied valuation of $2.5bn (�1.6bn) on Friday's SharesPost market.
Investor appetite in relatively unproven internet companies such as LinkedIn has boomed in recent months, with Facebook's $50bn valuation opening the door for Silicon Valley to make its mark on the stock exchange once again. Wall Street's renewed interest in the sector has also drawn comparisons, not always flattering, with the dotcom boom and bust of a decade ago.
"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.
LinkedIn has raised almost $100m in various venture capital funding rounds since its inception. Investors include Sequoia Capital, Greylock Partners, Bessemer Venture Partners, Goldman Sachs and the European Founders Fund.
Goldman Sachs and the European Founders Fund also hold a stake in Facebook, with the investment bank also leading an exclusive share offer to its top clients that aimed to raise $1.5bn in funding.
However, Goldman Sachs was forced to scrap plans to offer Facebook shares to its super-rich US clients in the private placement, saying the "level of media attention might not be consistent with the proper completion of a US private placement under US law". Foreign investors are not covered by the same rules and will still be able to participate in the Facebook offering.
Founded by the ex-PayPal executive Reid Hoffman in 2002, LinkedIn has 90 million users, with an unknown number opting to pay for premium features on the network. LinkedIn's net revenue nearly doubled to $161.4m in the first nine months of 2010, with $1.85m in profit, according to the company's SEC filing. Last year, the company moved into in profit.
Facebook, by contrast, is the world's most popular social network, aiming for mass-market appeal with more than 600 million registered users, according to recent estimates. Facebook had $1.2bn in revenue in the first nine months of 2010 and $355m in profit, according to the company's prospectus released to potential investors earlier this month.
Unlike Facebook, LinkedIn has a "freemium" commercial model, offering premium services to paying customers, while basic features and registration are free. Revenue from paying users fell to 27% for the first nine months of last year, from 41% in the previous year. Job listings and recruitment contributed 41% of net revenue in the same period, up from 29%. Advertising revenue remained steady at 32%.
Morgan Stanley, Bank of America and JP Morgan are LinkedIn's three lead advisers. 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, according to the SEC filing.
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Source: http://www.guardian.co.uk/technology/2011/jan/28/linkedin-flotation
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