

LinkedIn Wants More Cash, Offers to Sell $1.15B Worth of Stock - joshuaxls
http://allthingsd.com/20130903/linkedin-wants-more-cash-offers-to-sell-1-15b-worth-of-stock/

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peterjancelis
At a P/E of 935, I would also sell all the shares I could.

[http://finance.yahoo.com/q?s=LNKD](http://finance.yahoo.com/q?s=LNKD)

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rthomas6
So... why would it be a bad idea to short the stock now? Somebody talk me out
of it before I make an expensive mistake.

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pbreit
Shorting excellent companies that make lots of money is generally a bad idea.

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MichaelGG
They made $3.7M last quarter. That's not "lots of money" for a $32B market
cap.

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pbreit
Those are gaap earnings which are of minor relevance for high growth companies
prioritizing usage and revenue expansion. The company made $363 million in
revenues last quarter.

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MichaelGG
OK so I'm not a finance guy at all, but can you explain what I'm not getting:

[http://www.google.com/finance?q=NYSE%3ALNKD&fstype=ii](http://www.google.com/finance?q=NYSE%3ALNKD&fstype=ii)

363M revenue. Minus a ton of things for operating income of 8M. Then tax
brings it to 3.7M.

On what basis are we supposed to think LinkedIn is suddenly going to eliminate
> $300M of quarterly costs?

If you do the "1 times revenue" (so about 1BN) that's still not close to being
worth 32B.

I asked the same things when I was 18 in the dot-com boom and got hand-wavy
responses and people talking about eyeballs and stuff. Why is this
fundamentally different? I understand if it's too much to explain in a
comment, but could you link to some introduction that explains why a company's
costs should be ignored?

Also, why the stock would go _up_ when they meet expectations? If you bought
into the high P/E at $100 on the logic of "yeah the PE is high, but it's
growing into it" then you'd expect the PE to lower as they meet their goals.
Instead the PE stays around the same area and the stock goes up. That does not
sound rational. Edit: Like, 1% profit margin, so even if they magically
multiply that by 10 or 20 times, that'd still mean a PE in the hundreds.

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pbreit
A $1.5b run-rate on a product with $0 COGS and 60% growth after just 10 years
in business is "making lots of money".

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jwheeler79
Keep telling yourself revenue matters without profits, and see if that lasts
another 10 years. 60% growth after ten years but no profits? The only 'type'
of company that is, is a loser. Some would argue even Amazon has an
unsustainable formula and LinkedIn is no Amazon.

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Pxtl
LinkedIn is doomed the moment real competition appears. People only use it
while grimacing with disgust.

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EGreg
Why? I like it.

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BlackDeath3
I'm curious about this as well. I don't use the site, but I see a lot of hate
toward it (much of it seemingly unexplained).

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flaugh
This is a good example of why everyone who has any sense dislikes the company:
[http://community.linkedin.com/questions/8947/how-do-i-
preven...](http://community.linkedin.com/questions/8947/how-do-i-prevent-
linkedin-from-spamming-everyone-i.html)

Long story short: They're slimy.

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EGreg
OK but once you're in already, and you aren't connecting your address book
(hmm, what else are they going to do with it?) what sucks about LinkedIn so
much relative to other social networks?

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namenotrequired
I'd be very careful to buy stock at LinkedIn. I'm not surprised there's high
engagement as LinkedIn is full of dark patterns designed to drive engagement
but this is bound to backfire sooner or later, many of which I'm sure you've
all read about here already if not experienced. There are only so many
frustrations users are willing to put up with.

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lifeisstillgood
All I can think of is walled gardens need upkeep

LinkedIn is the most amazing business node graph out there - for a
professional person online it has _everybody_ and uptodate. But there is a
wafer thin business model if they played their hand brilliantly - and they
play it like a drunk Captain Hook trying second dealing in Vegas.

I just hope that when / if it all collapses we can club together and transfer
out the edge connections.

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xutopia
Can you explain what you mean? It's not obvious to me from my perspective.

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unono
Could linkedin use it's data for nefarious purposes? Yes.

Could some professionals ask to be compensated for being on the network? Yes.

Have the professionals on linkedin realized the above? No.

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lifeisstillgood
Many professionals are compensated for being on LinkedIn - just not by
LinkedIn direct !

Oh and I consider the spam I have to wade through to use it a nefarious
purpose :-)

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minimax
Does this dilute existing LinkedIn shareholders?

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swr
Yes. According to the prospectus[1] 4,165,972 shares new shares are being
issues raising the outstanding Class A shares to 97,732,877.

This is part of the reason there was a bit of a sell off after the
announcement.

[1]
[http://www.sec.gov/Archives/edgar/data/1271024/0001047469130...](http://www.sec.gov/Archives/edgar/data/1271024/000104746913008826/a2216551zs-3asr.htm#ca46401_prospectus_summary)

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xxpor
Mathematically, their price should go down exactly (due to this announcement)
(1 - Old # of outstanding shares / New # of outstanding shares)%

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cperciva
Only if you think the money they're getting for selling the stock is
worthless...

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xxpor
Oy vey, I knew I was doing something wrong, I was just too focused on the math
:)

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seiji
Stop giving them your money. Let them collapse like capitalism intends.

