Dive Brief:
- Among the many reasons LinkedIn CEO Jeff Weiner gave employees in a memo about the $26.2 billion Microsoft purchase of LinkedIn: Their company now had a chance to “to control our own destiny.”
- According to The New York Times' Dealbook, Weiner may have left one key reason out of that bit of communications. Writer Andrew Ross Sorkin noted that missing link would be the firm's less-than-stellar stock price and its heavy reliance on stock-based compensation.
- Such a position could negatively affect its talent bench strength over the long haul, especially since LinkedIn's stock price had been dinged as of late.
Dive Insight:
Behind all the glowing headlines, Sorkin explains that LinkedIn has not made money over the past two years, adding that in early 2016, LinkedIn’s stock price dropped 40% in value after it revealed "weaker-than-expected growth for the year." At the time, the stock price fell from $225 on New Year's Day 2016 to $100 about a month later.
And because LinkedIn relied heavily on stock share-based compensation, rumors following the stock drop mentioned the possibility LinkedIn would begin losing top talent as the latter began to see their stock-based income value evaporating. Mark Mahaney, a veteran technology analyst at RBC Capital Markets, told Dealbook that “If the stock had stayed down, it [LinkedIn] would have seen employee churn.”
That's no longer an issue, now that Microsoft has made its move to purchase LinkedIn.
