* Shares now expected to price at $42-$45
* Higher price range values LinkedIn at $4.11 bln
* Morgan Stanley, BofA, JPMorgan lead underwriters
(Adds details on Facebook's valuation, adds comment)
By Clare Baldwin and Jennifer Saba
NEW YORK, May 17 LinkedIn said it expects to
raise 30 percent more than it had forecast in its initial
public offering, in a sign of the strength of investor appetite
for social networking companies.
The company, which operates a website where professionals
connect with one another, now plans to sell shares at $42 to
$45 each, up from a previous range of $32 to $35.
At the middle of that range, the nine-year-old company
would be valued at $4.11 billion. [ID:nL3E7G91M1]
The new price range values LinkedIn at almost 17 times its
2010 revenue. That is about half the valuation multiple that
investors are giving to Facebook, which is expected to go
public in April 2012 and now has a market value of around $70
Both companies are expensive compared with other tech
stalwarts, including Google Inc (GOOG.O), whose shares trade at
about six times revenue.
To some investors, LinkedIn's valuation is too high.
"I wouldn't touch the stock, I wouldn't own it, not at $45,
not at $43," said Eric Jackson, managing member at hedge fund
He might be willing to buy it at a much lower price, like
around $25 a share, he added.
The stock market's reception of LinkedIn will be an
important gauge of investor appetite for social networking,
including the Big Four of the social media space -- Facebook,
Twitter, Groupon and Zynga -- which are widely expected to go
public in coming years.
LinkedIn's growth has been rapid: It doubled its revenue
last year to $243.1 million and posted net income for common
shareholders of $3.4 million.
Breakingviews-IPO recalls credit boom [ID:nN17148191]
Reuters Insider-IPO not a game changer, says
ITG Research head:
However, in the risk factors section of its prospectus, the
company disclosed it does not expect to be profitable in 2011.
"Our philosophy is to continue to invest for future growth,
and as a result we do not expect to be profitable on a GAAP
basis in 2011," the filing said, referring to generally
accepted accounting principles.
It is not uncommon for an unprofitable company to seek a
U.S. public listing, but it could give investors pause to see a
company bluntly forecast swinging to a loss during its first
year as a publicly traded stock.
"If LinkedIn goes out and doesn't trade well that could
present a problem marketing other social media companies going
forward," said Yvan-Claude Pierre, a corporate lawyer at DLA
Piper in New York who has represented companies that are going
Companies such as Facebook, Twitter, Groupon and Zynga have
stoked investor interest in social media companies and command
multibillion-dollar private market valuations.
But there are signs investor appetite could be waning.
Renren (RENN.N), a company sometimes called the Facebook of
China, went public in the United States earlier this month. Its
shares soared 29 percent in their debut, but have since dropped
below the IPO price. [ID:nN04185096]
French social networking site Viadeo, the second-biggest
social networking site for professionals behind LinkedIn, said
on Monday it would defer plans to go public. [ID:nLDE74F0D9]
Ironfire's Jackson thinks LinkedIn has some positives,
including its built-in professional audience, but its biggest
problem is its bottom line.
"LinkedIn has its niche and Facebook has its niche.
Facebook's is much bigger and much more profitable," Jackson
Of the 7.84 million shares LinkedIn is offering, 4.83
million will come from the company and the rest from
LinkedIn co-founder and ex-PayPal executive Reid Hoffman is
among the stockholders selling shares in the IPO, but he will
still have 21.7 percent of the voting power in the company
after the offering. LinkedIn began in Hoffman's living room in
Other big stakeholders selling shares in the IPO include
Goldman Sachs Group Inc (GS.N), Bain Capital Venture Integral
Investors LLC and McGraw-Hill Cos Inc MHP.N.
LinkedIn, based in Mountain View, California, helps
professionals find new business contacts and reconnect with old
"It's like a Rolodex on steroids," said Rich Stromback, a
venture capitalist who uses LinkedIn frequently.
Underwriters on the offering are being led by Morgan
Stanley, Bank of America and JPMorgan. The company's shares are
expected to begin trading on the New York Stock Exchange on
Thursday under the symbol "LNKD." LNKD.N
(Reporting by Sweta Singh in Bangalore and Alina Selyukh,
Clare Baldwin and Jennifer Saba in New York; editing by Ian
Geoghegan, John Wallace and Matthew Lewis)