LinkedIn Corp (NYSE:LNKD) is returning to the equities market for additional funding according to a statement from the company this afternoon after the markets closed on Wall Street. The firm’s shares lost more than 3% of their value immediately after the announcement in after hours trading, but investors were pulling back at time of writing.
According to today’s announcement LinkedIn Corp (NYSE:LNKD) will seek $1 billion in additional financing from a stock offering in order to continue the expansion of its business and bolster working capital. At today’s closing price, the $1 billion offering would mean offering around 4,062,894 new shares.
LinkedIn Corp (NYSE:LNKD) originally went public in May of 2011 and shares in the company have risen by more than 160% since it started trading. In 2013 good financial results and growing optimism about the company’s business model have led to an increase of around 114% in the value of the company.
The rise in the value of the company through 2013 means that now is an ideal time for the company to offer more shares to the public, though it may not be the best time for investors to buy into the company. LinkedIn Corp (NYSE:LNKD) is currently worth around $32 billion, and it is trading at more than 700 times 2012 earnings.
According to the filing that LinkedIn Corp (NYSE:LNKD) made with the SEC this afternoon, “The principal purposes of this offering are to increase our financial flexibility and to further strengthen our balance sheet.” The company also floated the idea of using the additional money to make strategic acquisitions.
It is unclear when the company will bring the additional shares to the market, but that will become clear once regulatory approval is given to the move, and the company decide the best date for the offering. J.P. Morgan, Morgan Stanley, Goldman Sachs, BofA Merrill Lynch, and Allen & Company will underwrite the offering according to the filing.