Facebook Inc (FB), LinkedIn Corp (LNKD): Advertisers See Culpability in Social Media

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Both Yahoo! and Facebook Inc (NASDAQ:FB) actually have notable upside potential for those seeking turnaround opportunities. Yahoo! has seen its top line fall in recent years, but, as the Tumblr deal shows, it is taking more aggressive steps to change with the times under new CEO Marissa Mayer. The market is just starting to take notice. Facebook, meanwhile, has been trading below its IPO price since day one, but still has massive potential — if it can monetize its customers better.

Avoiding the problem

Interestingly, the one social media company most immune to the issue is LinkedIn Corp (NYSE:LNKD). Only 23% of the company’s top line came from advertising in the first quarter; subscriptions and job search tools accounted for 20% and 57%, respectively. Moreover, LinkedIn Corp (NYSE:LNKD)’s focus on the business world insulates it from objectionable content in many ways, too.

Those looking for a safe haven from this brewing storm should like LinkedIn Corp (NYSE:LNKD), but the stock is way ahead of itself. With a trailing price to earnings ratio of around 500, all but the most aggressive investors should book profits. If there’s a notable pullback, however, LinkedIn Corp (NYSE:LNKD) would be worth a second look.

A sleeper issue

Objectionable user generated content is one of those problems that is hard to deal with and can cause serious harm. While it’s a sleeper issue, investors need to watch it. Should the issue catch hold of the public’s eye, Facebook and Yahoo!, among others, could come under increasing pressure from advertisers both publicly and on the top line.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Facebook and LinkedIn. The Motley Fool owns shares of Facebook and LinkedIn.

The article Advertisers See Culpability in Social Media originally appeared on Fool.com and is written by Reuben Brewer.

Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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