LinkedIn valued at $3 billion ahead of IPO

LinkedIn is to sell $274 million in shares at its initial public offering (IPO) next week.

The share price is expected to be between $32 and $35, and suggests LinkedIn is worth $3 billion – much less than consumer rival Facebook, which was valued at $50 billion earlier this year.

LinkedIn will start selling shares on 18 May, becoming the first of the major social networks to go public as investors ponder if the web is hitting a second bubble.

Of the total 7.8 million shares up for grabs, 4.8 million will come from the company itself with the rest from investors – meaning the firm itself only expects to see $146 million of the total coming back to its own coffers.

The business-focused social network said in a filing with the US Securities and Exchange Commission that it expects to use the cash to fund product development and expansion, but could also use it for acquisitions.

That will leave more than 94 million outstanding shares, suggesting the firm is worth more than $3 billion. LinkedIn, which will trade as “LNKD” on the New York Stock Exchange, made $15.8 million in profit last year.

The company makes a fifth of its revenue from premium subscription fees, half from its “hiring solutions”, and the rest from marketing. It has 102 million registered users globally, but draws in 75 million unique users a month.