LinkedIn's IPO priced at $45 a share

May 18, 2011 - 5:43 PM

SAN FRANCISCO (AP) — Investors keen to get in on the online networking craze snapped up LinkedIn Corp. shares at $45 each, the top of the company's expected IPO range, giving the company a market value of over $4 billion. That's the highest market value for a U.S. Internet company taking its first bow on Wall Street since Google Inc. went public nearly seven years ago.

LinkedIn Corp.'s shares will make their market debut Thursday on the New York Stock Exchange. Mutual funds, pension funds and other major money managers got the first chance to buy most of the IPO's 7.84 million shares, since shares in most IPOs typically are sold to investment bankers' top customers. That means Main Street investors will get their first chance at LinkedIn on Thursday. Most analysts believe that demand will send shares higher in their first day of trading even though the stock priced 30 percent to 40 percent higher than LinkedIn's initial target of $32 to $35 per share.

The lofty $4.3 billion appraisal reflects investors' belief that Internet services which connect people with common interests will be able to make more money as the Web's audience steadily expands. LinkedIn's valuation eventually may look modest compared to more other Internet companies that are being touted as potentially going public in the next 18 months. The short list includes: online messaging service Twitter, Web game maker Zynga, coupon site Groupon and Facebook, the social network that boasts more than 500 million users.

LinkedIn, based down the street from Google's Mountain View, Calif., headquarters, runs a website that serves as part-Rolodex, part-hiring center for workers trying to meet people who might further their careers and businesses searching for talented employees. More than 102 million people have set up LinkedIn profiles so far. Another million join each week.

The company makes most of its money from fees charged for better access to the data on its website. It earned $3.4 million on revenue of $243 million last year, but expects to lose money this year as it invests in new products and more computers to run its services.

LinkedIn's initial public offering of stock raised a total of $353 million. The company's take works out to $217 million, before investment banking fees and other expenses. The remaining $136 million was divided among 87 stockholders who sold a total of 3 million shares in the IPO.

The biggest windfalls went to: Goldman Sachs Group Inc., which will get $39 million from the sale of 871,840 shares; the McGraw-Hill Cos., which will get $20 million from the sale of 435,920 shares; and Reid Hoffman, LinkedIn's co-founder and executive chairman, who made $5 million on the sale of 115,335 shares. Hoffman retains a 20 percent stake now worth $853 million.

The 43-year-old also was among the early investors in Facebook, which has indicated that it might file IPO papers before May 2012.

LinkedIn's CEO is Jeff Weiner, a former Yahoo Inc. executive who has been running the professional networking company for the past two years. The company's stock will trade under the ticker "LNKD."