This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

LinkedIn Wants To Sell Shares And Buy Hires

Stocks in this article: FB GRPN LNKD P SINA YNDX

James Dennin, Kapitall: LinkedIn's selling shares, Twitter's making hires. Social Networking is monetizing. And the market is responding. 

LinkedIn (LNKD) - in a move surprising a number of investors - is selling off what could amount to a billion dollars worth of stock. This of course follows backlash to the employment-focused social networking website's new monetization strategy, allowing job-seekers to purchase "premium badges" that get their resume extra views.

[Read more from Kapitall: Skeptical Investors Mull Verizon Split]

Calling the practice discriminatory, opponents argue that it gives unjustified preference to people who can afford the $30 a month fee, while also cheating employers by bombarding them with applicants who may not be qualified or deserving. But the practice is not entirely unusual - CareerBuilder.com has a similar feature. Nor is it particularly that big a problem considering less than 3% of new hires come from all the major online job boards combined. 

LinkedIn's stock took a hit when the share sale was first announced, but this isn't particularly surprising. The market usually expects that introducing new shares into the float will dilute the value of existing shares. However, the real question is what the company is going to do with all that extra cash. LinkedIn was one of the best performing stocks last year. Unlike Facebook (FB), the company's stock soared after its IPO, up 45% in a single day. It doubled in value in 2013 alone, and was the best-performing IPO of 2011. With over 200 million users, it's one of the largest social networking sites out there. And with an extra billion dollars – on top of what the company already has on its balance sheet – they could be poised to grow even more.

Or not. Some are calling the sell-off a blunder, or at least an indication that LinkedIn's stock has peaked out. Expansion is easier to fund from the inside, or by taking on some debt, than by taking on new equity. This is actually described by some investors as the "pecking order" of acquiring capital. The only time issuing stock can be a particularly lucrative option is if your stock is overvalued. After all, why borrow money that you'll have to pay back when people are willing to overpay for your stock? With the stock market already relatively hot, on tech companies in particular, an additional stock offering could be the cheapest way to raise a lot of money.  

With Facebook introducing video ads and Twitter hiring a commerce officer, now appears to be the time when a number of social networking sites are pursuing monetization strategies. With some companies, like Groupon (GRPN) or Pandora Media (P) these efforts are largely self-evident. Groupon is providing a service directly to merchants and Pandora has about 70 million listeners that advertisers want to reach. But what about the more etherial social networks? These are the companies that often have much younger audiences, but very little 'product' that they can tangibly sell. If LinkedIn can't figure out a better way to monetize, aside from running as just another ineffective job board, what are they going to do with all that cash?

Click on the interactive charts to view analyst ratings over time.

Which of these social media stocks has the best monetization strategy? Use the interactive charts below to begin your own analysis. 

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs