LinkedIn is expecting to rake in about $1.2 billion in share sales after announcing an offering of around 5.4 million shares at $233 each. In a statement made by the company, it was determined that the money will be used for product development, international expansion and potential acquisitions. It is unclear what the company is considering as far as acquisitions, and investors question whether a large purchase or a number of small one is in store. Scott Sweet, founder of IPO Boutique said: “To keep up its pace of growth, LinkedIn may need to start looking to the outside. In tech, especially social media, if you have the money, you’re going to acquire.”
LinkedIn launched in 2003 and had only 4,300 members. Since then, it has acquired 238 million registered users, and revenue is expected to double from 2011. The stock market pick-up is another theory behind the company’s decision to release the billion-dollar share offering. However, Craig Huber, an analyst at Huber Research, said: “This is what companies should do when the stock market has this big of a move. It’s financing 101.” Huber also warns of some of the potential downfalls of using the billion-dollar profit on acquisitions. “Acquisitions could actually slow down LinkedIn’s growth,” said Huber. “There’s integration risk, and media and internet companies are notorious for overpaying.”
