LinkedIn Corp (NYSE:LNKD) has just 225 million users and earns nearly $5 per user in annual revenue. Facebook earns about $0.20 per user. Moreover, LinkedIn Corp (NYSE:LNKD)’s user engagement is tiny compared to Facebook. People don’t chat, or engage to the same degree on LinkedIn Corp (NYSE:LNKD), due to it being a business networking site where most communication takes place in private email.
On LinkedIn, I have 930 connections, and post an update several times a day via tweets. However, in the last six months, I have had less interaction with all of my combined LinkedIn posts, as I have had with any one typical Facebook post. This lack of activity makes LinkedIn less appealing for advertising, and at $5 per user, I can’t imagine how much more revenue it can squeeze from users.
In my opinion, Facebook is a sleeping giant, a company that is about to erupt with fundamental gains. This one advertising service alone could double its revenue, and now with the company aggressively penetrating mobile, there is even more room for opportunity.
With that said, Facebook’s discount to sales relative to others in the space (LinkedIn, Yelp, Zillow) makes the stock very attractive. Its $0.20 per user gives it great fundamental upside, and its unprecedented user base means the company is here to stay. Therefore, I say Facebook is a great buy, and from this point forward — following my post-earnings buy — I plan to hold for the long-term.
The article Is This Advertising News a Fundamental Game-Changer? originally appeared on Fool.com and is written by Brian Nichols.
Brian Nichols owns shares of Facebook. The Motley Fool recommends Facebook and LinkedIn. The Motley Fool owns shares of Facebook and LinkedIn. Brian 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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