Investors are clamoring to connect with the online networking service LinkedIn Corp. in the latest sign of the fervor for Internet companies that specialize in bringing together people with common interests.
The demand to buy a piece of LinkedIn is so intense that the eight-year-old company is expected to make its stock market debut Thursday with a value of at least $4 billion U.S. That would make LinkedIn's initial public offering of stock the biggest by a U.S. Internet company since Google Inc. went public in 2004, according to the research firm Renaissance Capital.
The appetite for LinkedIn's IPO encouraged the company's bankers to raise the asking price by about 30% Tuesday to $42 to $45 U.S. per share. It wouldn't have been surprising if the IPO was priced even higher Wednesday evening and then sells for more than that Thursday morning when they are expected to begin trading on the New York Stock Exchange under the symbol "LNKD."
The IPO is expected to raise about $200 million U.S. for LinkedIn and produce $125 million U.S. to $135 million U.S. for existing stockholders, who plan to sell some of their shares. The biggest winner will be LinkedIn's co-founder and chairman, Reid Hoffman, whose 20% stake in the company will be worth more than $800 million U.S.
The coming-out party on Wall Street for LinkedIn, which focuses on connecting professionals online, could be the prelude to even more excitement if several popular Internet companies decide to go public during the next year. The list of candidates includes the online messaging service Twitter, online game maker Zynga, online coupon service Groupon and the biggest social network of all, Facebook.
Facebook is the most prized among the Internet companies still awaiting an IPO. It was valued at $50 billion U.S. as part of an investment organized in January by Goldman Sachs Group Inc., a major shareholder in LinkedIn. If Goldman Sachs follows through on its plan to sell its entire LinkedIn stake in the upcoming IPO, the bank would receive about $38 million U.S. at the mid-point of the targeted price range.
LinkedIn, based just down the street from Google's Mountain View, Calif. headquarters, has become profitable by building a website that acts both as a Rolodex and a hiring center.
People set up LinkedIn accounts to post the resume on a page and connect with current and past colleagues. LinkedIn members can then ask the people they know to introduce them to other connections that might help further their careers.
Although not nearly as popular as hanging out on Facebook, LinkedIn has emerged as a widely used directory. Through March, it had 102 million members and is adding another million each week.
The company gets about two-thirds of its revenue from fees that it charges for greater access to the website and more data about the expertise listed on each member's page. Businesses and job headhunters use LinkedIn to recruit people who might not even be looking for a job at the time. LinkedIn also has made money from business surveys of its members and a service that offer career advice to college graduates.
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