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LinkedIn Corp (LNKD), Facebook Inc (FB): Should We Have a Bullish Stance on the Internet Sector?

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One of my earlier posts contains key takeaways from internet companies that presented in the Technology, Media and Telecom conference held in Houston a couple of days back. However, that post contained mostly well-recognized names in the market like Pandora Media Inc (NYSE:P) and Netflix, Inc. (NASDAQ:NFLX). The post stated how the market is bullish on these companies

However,  a relatively smaller name also presented in the conference, which I will discuss in this post. What needs to be seen is: Is the whole internet sector bullish right now? Let’s have a look:

LinkedIn Corp (NYSE:LNKD)

A company with only $345 million market cap

ReachLocal Inc. (NASDAQ:RLOC) has been an interesting company for the tech lovers. The online marketing company helps small and medium sized businesses, or SMBs, acquire, maintain and retain customers via the Internet through its internet marketing consultants (also known as IMCs). The company’s CEO and CFO presented at the TMT conference.

The management was optimistic regarding the increased international sales force and higher productivity levels from international IMCs, as well as the progress of multiple new products in various stages of testing and usage including ClubLocal, ReachEdge, and ReachCommerce. These must be new terms for those who don’t follow this company. ReachCommerce enables local businesses to take their entire booking and buying process online. ClubLocal is the consumer-facing flip side of ReachCommerce, which is the back-end platform for the service. However, ReachCommerce is being positioned and sold as a stand-alone product as well.

ReachLocal Inc. (NASDAQ:RLOC) also highlighted expectations for steeper growth in the third quarter, higher margins in the fourth quarter, but overall full year numbers to come in potentially below the mid-point of guidance, where they typically achieve.

Another confident company

CaféPress distributes online products customization and personalization platforms. The company has been one of very few internet companies that have received less attention from the market. However, this can be attributed to the fact that the company only recently made its share public through an Initial Public Offering in March last year. However, since then the share performance has been horrible and the stock is down almost 70% since its IPO.

Social opportunities are strong for CaféPress and progress towards increasing the company’s focus on this initiative was encouraging. CaféPress has put social handles on all of their content, recently introduced a social login, and has started partnering with Facebook Inc (NASDAQ:FB) on Facebook gifts. CaféPress highlighted a recent successful Mother’s Day promotion with Facebook gifts.

Facebook has another experience that it shares with CaféPress – it also has seen its share price plummet since its IPO back in mid 2012. For whatever reason, the stock has got a beating from the market; it definitely is a solid buy now. It is still very early in Facebook Inc (NASDAQ:FB)’s mobile advertising trajectory, and marketer feedback on mobile and News Feed ads is now more positive. The Street expects continued ad growth acceleration through the second and third quarters. The Facebook Exchange and Custom Audiences should also drive improvements in desktop yield in 2013. JP Morgan believes that Facebook shares are not well-owned, and S&P 500 inclusion could come in late 2013 or the first half of 2014.

It is interesting to note that falling below the IPO share price is not a norm in the tech sector. Perhaps, LinkedIn Corp (NYSE:LNKD) has been the best display of this concept as the stock of social networking website has soared more than 100% since its IPO back in 2011.

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