LinkedIn Corp (LNKD): A SWOT Analysis

Advertising can get better:
LinkedIn’s advertising business hasn’t gained much momentum and is growing at a slower pace, compared to its subscriptions and recruiting businesses. The online advertising market is a big one, and LinkedIn can reasonably utilize the data from its members to show more targeted ads to earn incremental revenues. In 1Q13, LinkedIn earned only $75 million from its advertising business, which is a mere fraction of what bigger social media rivals like Facebook Inc (NASDAQ:FB) earn from ads. On a comparative basis, Facebook earned $1.25 billion in 1Q13 from online advertising. LinkedIn’s advertising business has a lot of room for growth from current levels.

Threats

Newer social platforms: A new breed of social media firms is gaining solid momentum in adding users rapidly. These companies include Instagram, Twitter, Tumblr, Pinterest, SnapChat etc. And all of these firms are directly or indirectly competing with LinkedIn for users and for minutes spent on their respective platforms. If a newer professional network pops up that directly competes with LinkedIn Corp (NYSE:LNKD), the company might risk losing users and engagement.

Other Internet platforms: Leading Internet platforms like Facebook Inc (NASDAQ:FB) and Google Inc (NASDAQ:GOOG) have very large user followings, and they compete directly with LinkedIn for users and user engagement. And if these sites unveil social offerings that are more professional-oriented, LinkedIn’s fortunes might go downhill.

The Bottom Line

LinkedIn Corp (NYSE:LNKD) has been growing rapidly across the board, but competition in the social media space is rampant. And other competitors like Monster Worldwide, Inc. (NYSE:MWW) are still sticking around to keep the online recruitment business more competitive. LinkedIn’s ability to grow users across the globe, and stimulate those users, will be crucial for the company’s long-term prospects.

The article LinkedIn: A SWOT Analysis originally appeared on Fool.com and is written by Ishfaque Faruk.

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