Should Investors Be Worried About LinkedIn?

In this video, Motley Fool analysts John Reeves and David Meier discuss LinkedIn's (NYSE: LNKD  ) announcement this week that it would be selling a secondary offering of an additional $1 billion in new shares. David discusses why this was a great move for the company despite the share dilution, and how he thinks LinkedIn will use the additional cash.

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  • Report this Comment On September 07, 2013, at 2:27 AM, prginww wrote:

    I disagree with pretty much all the comments in this interview. I think you guys are just trying to rationalize your continued position in the company. The LNKD board is way smart for taking advantage of the now ridiculous share price by offering for sale to bonehead buyers new shares at this Foolish price. It seems prima facia proof of the 'Ridiculousness of It All'l by diluting outstanding shares by a BILLION dollars and having no effect on the share price. How crazy is that? Eventually reality will creep in, like it always does. So go ahead and rationalize, but the only entity to benefit from this move is the company and not the existing shareholders (they got slammed and now just pretending they didn't.)

  • Report this Comment On September 07, 2013, at 5:11 PM, prginww wrote:

    Amazingly sensible video. The misunderstanding of this stock by most lay analysts (see above) is rather astounding. But that is the way it is and why money can be made in the market.

    lnkd has a the inside track on pretty much blowing up and taking over the worldwide, 600 billion dollar staffing industry. They need cash to do so -- they need to buy smaller niche -- either geographic or job specialty -- rivals to maintain the power of their network.

    I only wish they had raised more money. As the video explains, the dilutive effects are trivial -- and the market responded appropriately.

    Can lnkd fail to grow into its valuation? Of course. That is the risk an investor takes in stocks like this. But lnkd has a shot of growing 10-30x larger than it is. As an investor you evaluate the probabilities of the various potential outcomes and make your choices.

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