Shares of employment social networking website LinkedIn are down roughly 3% today on the news that the company is issuing $1 billion in common shares. According to Motley Fool analyst Matt Argersinger, shareholders aren't too pleased about this, as the issuance of new shares will dilute their own holdings. However, if these investors took a longer-term view, they'd realize that they could actually make a pretty penny from LinkedIn's latest move.
Matt thinks that now is the perfect time for LinkedIn to issue more shares -- after all, it's just when a company doesn't need the money that it should be stockpiling it. By issuing shares, LinkedIn will add to its already sizable cash reserves, which, coupled with a lack of debt, will put the company in a very strong position to expand. Matt thinks that LinkedIn could go in a lot of different directions by using this money, including expanding internationally and by acquiring smaller social media sites. No matter what the company decides to do, in the end investors are sure to profit from LinkedIn's ever-growing cash hoard.
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The article Why Does LinkedIn Need Cash Now? originally appeared on Fool.com.
Fool contributor Mark Reeth has no position in any stocks mentioned. Matthew Argersinger owns shares of Apple and Amazon.com. Matthew Argersinger has the following options: long January 2015 $400 calls on Apple, short January 2015 $400 puts on Apple, long January 2014 $200 calls on Amazon.com, short January 2014 $200 puts on Amazon.com, and short January 2014 $300 calls on Amazon.com. The Motley Fool recommends Amazon.com, Apple, Facebook, Google, and LinkedIn. The Motley Fool owns shares of Amazon.com, Apple, Facebook, Google, and LinkedIn. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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