Executive social network LinkedIn has finally filed for a $US3.5 billion IPO, with the company scheduled to float on the New York Stock Exchange on May 19.
The announcement comes after the company actually filed for the IPO in January, and as up and coming Silicon Valley tech giants are hastily courting their own public listings, with Groupon and Facebook supposedly making plans.
When LinkedIn flagged the listing in January it said it could make $US175 million, but now it says that figure could be as much as $US274 million. It will offer 7.84 million shares at a price range of $32-35 each.
Last year LinkedIn made a profit of $US15.4 million from a turnover of $US243 million in 2010. The site primarily makes its money by selling software packages and through premium subscriptions sold to its members.
LinkedIn has been attempting to carve out its own space in the social networking scene for some time, and appears to be on the right track – it recently counted its 100 millionth user in March, and features introduced to combine users profiles’ with other social networks have been successful.
While LinkedIn may not be as large as Facebook, which is now heading well above 500 million users worldwide, the corporate site has a much more professional focus which has proven attractive for advertisers.
No doubt Facebook will be watching closely to see how the LinkedIn IPO is received.
The company itself will sell 4.8 million shares with the remainder to be sold by company executives, including co-founder and former PayPal executive Reid Hoffman. Banks Morgan Stanley, Bank of America and JPMorgan will be involved as bookrunners, while investors Sequoia Capital, Greylock Partners and Bessemer Venture Partners won’t participate.
Goldman Sachs is reportedly selling all of its shares as part of the float.
However, while the IPO is the first in what could become the biggest rush of tech floats since the dotcom crash of the early 2000s, LinkedIn offers a warning – it will burn through cash this year and may not make a profit.
The warning came earlier this year, when it made its original filing with the Securities and Exchange Commission. It repeats the company “may not be able to generate sufficient revenue to sustain profitability”, and also flagged an increase in hiring and reinvestment.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
