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Facebook Inc (FB), LinkedIn Corp (LNKD): Linked and Loaded for Growth

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The job market has become more challenging than ever. With tens of thousands of new graduates joining the search each year, they must find a way to distinguish themselves to employers. A professional way to show what you know, what you have done, who you know, and network with other professionals is to create a LinkedIn Corp (NYSE:LNKD) account. I believe the challenge of standing out will propel LinkedIn to all-time highs.

The overview

LinkedIn Corp (NYSE:LNKD) is the world’s largest professional network with 202 million members in more than 200 countries. There are over 20 million college students and recent graduates with accounts, and this is the largest growing demographic for the company. A key statistic to note is that 86 of the Fortune 100 companies use LinkedIn Corp (NYSE:LNKD)’s corporate talent solutions service, making it the most valuable segment of the company. I believe LinkedIn Corp (NYSE:LNKD) has the potential to reach 500 million members and provide services to all Fortune 500 companies by 2020.

Earnings blowout

The fourth quarter and full year 2012 reports were remarkable for LinkedIn Corp (NYSE:LNKD). Take a look at the key statistics compared to 2011:

4th Quarter:

Revenue increased 81% to $303.6 million

Earnings per share increased 192% to $0.35

Net income increased 66.7% to $11.5 million

Full Year:

Revenue increased 86% to $972.3 million

Earnings per share increased 216% to $0.89

Both sets of numbers blew past analyst expectations. Management stated, “Continued investment in our talent and technology infrastructure drove momentum in both product and monetizations, resulting in record revenue, profitability, and cash flow.” I think management has the correct vision and further investment will result in continued growth throughout the company.

Revenue stream

LinkedIn Corp (NYSE:LNKD) has a diverse revenue stream and each is experiencing strong growth. Here is the fourth quarter distribution:

Revenue from Talent Solutions increased 90% year-over-year
Revenue from Marketing Solutions increased 68% year-over-year
Premium Subscription revenue increased 79% year-over-year

Earnings on the rise

Over the next several years, LinkedIn is expected to experience the most impressive earnings growth of the companies I follow. Analysts were some way off with last year’s estimates, and I think these numbers are too low as well. Take a look at the expectations through 2015:

2013: 50.6% growth
2014: 55.2% growth
2015: 48.1% growth

Social competitor

The largest social network in the world, with over 1 billion active users, belongs to Facebook Inc (NASDAQ:FB). Facebook Inc (NASDAQ:FB)’s mission is to connect the world socially, rather than professionally. It is experiencing high-growth too, but not on the level of LinkedIn. Here’s a summary of Facebook Inc (NASDAQ:FB)’s fourth-quarter report released in January:

Revenue increased 40% to $1.585 billion

Advertising revenue increased 41% to $1.33 billion

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