LinkedIn Corp (NYSE:LNKD) operates an online network for professionals and has surged to a valuation of $20 billion. The company, founded in 2002, expects to generate revenue of around $1.5 billion for the year. Earnings are expected to continue surging, but the stock trades at an enormous 88x 2014 estimates. Incredibly a social network for professionals has surged to the size of nearly 10x that of the leading real estate site built in the same time period.
LinkedIn Corp (NYSE:LNKD) and Tripadvisor Inc (NASDAQ:TRIP) do have the advantage of being the unquestioned leaders in their sectors. Zillow Inc (NASDAQ:Z) though faces pressure from Trullia . The stock might not be as well known, but analysts expect the company to report $111 million in revenue on 64% growth for 2013. This compares close to the $176 million for Zillow.
The online market place for real estate websites appears unlimited at these levels. Both Zillow Inc (NASDAQ:Z) and fellow upstart Trullia remain incredibly small for a market as enormous as real estate. Could the leading site eventually reach the value of Tripadvisor Inc (NASDAQ:TRIP) appears unquestioned and the potential to match the success of LinkedIn Corp (NYSE:LNKD) at $20 billion or more than 10x that of Zillow doesn’t seem too stretched.
Unfortunately a lot of time and distance exists between those two periods with no guarantee that Zillow Inc (NASDAQ:Z) will be the eventual winner in the sector. The stock is considerably expensive at the current levels even after falling 15% since the last earnings report.
Investors don’t need to rush into the stock, as the ideal time to buy will be on the next swoon in the stock like back in November of last year when it plunged below $25 and eventually rebounded to over $62.50. Wise investors will realize that Zillow Inc (NASDAQ:Z) has unlimited potential, but the big gains will only accrue to investors smart enough to buy on weakness instead of chasing the stock higher as the risk exists that Trullia might be the eventual sector leader.
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