LinkedIn Corp (LNKD)’s Strong Growth Trajectory

Page 1 of 2

LinkedIn Inc.

Editor’s Note: This article was originally written before LinkedIn’s latest earnings release.

With the stock price of LinkedIn Corp (NYSE:LNKD) up almost 70% year-to-date and a sky high P/E in excess of 1300, one would think that the company is fairly valued, if not overpriced. However, LinkedIn Corp (NYSE:LNKD)‘s growth potential remains largely untapped, even with three different revenue streams that separates the company from other Internet business models which are heavily reliant on advertising revenues alone.

Strong growth trajectory

LinkedIn Corp (NYSE:LNKD)’s professional networking platform managed to sign up a solid number of users with more than 202 million members, and still has a large addressable market share around the world. The company did state that it views it addressable number of users at roughly 600 million, which is the number of knowledge workers or professionals across the globe.

And the company’s growth trajectory seems rather solid, as it grew 86% in 2012 and ended the year with top-line revenues of $972 million. However, the company’s net income margin is a paltry 2.2%, thought it is widely expected to expand substantially in the near-to-medium term. And LinkedIn’s management has painted a solid picture of the company’s revenue generation abilities by laying out its revenue expectations of more than $1.4 billion for the full-year 2013.

LinkedIn Corp (NYSE:LNKD)’s business segment seems to be doing well, as the company signed up more than 2400 new corporate customers in the last quarter as it becomes a more prominent place to network and for recruitment. The subscription revenues business of LinkedIn did pretty well, as it gets more and more sales and business development professionals to pay for enhanced services on LinkedIn’s platform.

LinkedIn’s online advertising business represents an untapped revenue source for the company, as it earned only $258 million from advertising in 2012. While its early stages, there is substantial room for growth as competitors like Facebook (NASDAQ:FB) and Google earn exponentially higher revenues from online advertising. LinkedIn Corp (NYSE:LNKD) did see an uptick in the number of advertisers for certain products, and this trend should continue as the company realizes its full potential.

Gaining more customers

LinkedIn’s key driver has been the recruiting dollars that companies pay to list job ads. This business segment made up ~54% of the company’s total revenues, and is the one that is expected to grow faster as well. LinkedIn has been gaining more corporate customers, as its lead competitor Monster Worldwide, Inc. (NYSE:MWW) struggles to gain revenues and market share. In the last quarter, Monster’s revenues declined 13% and net income declined 61% on a year-over-year basis. And Monster’s CEO stated that the company is still on the look-out for a prospective buyer, which sparked a massive sell-off for the shares of Monster Worldwide, Inc. (NYSE:MWW).

LinkedIn continues to gain share from Monster, and it seems pretty evident that Monster Worldwide, Inc. (NYSE:MWW)’s partnership with Facebook hasn’t gained traction at all. As LinkedIn becomes a more notable outlet for recruiting, the company will be able to increase prices from corporate clients, most of whom are more than willing to pay extra for premium services.

User engagement and mobile presence

Thanks to a number of new product introductions and innovations, LinkedIn’s user engagement levels have seen an uptick in the last quarter and places it amongst the most visited websites in the world. The company now ranks as the 25th most visited platform across the globe, and increased product innovations has increased its quarterly page views on desktops to 9.8 billion. As more and more first time users sign up for LinkedIn Corp (NYSE:LNKD) and other individual revisit the site, the platform’s engagement will increase.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!