LinkedIn Corp (LNKD) Eating Facebook Inc (FB)’s Lunch

It’s been one heck of a run for professional networking platform LinkedIn Corp (NYSE:LNKD). With an IPO pricing at about $45 per share, the stock took off and hasn’t looked back since. And when we consider its market opportunity of 600 million-plus professionals within the 3.3 billion in the global workforce, I’d say there’s plenty of room to run.

LinkedIn Corp (NYSE:LNKD)

Two sides to every coin
On the flip side of the coin, Facebook Inc (NASDAQ:FB) has had a pretty tough go of it since going public. Facebook is very relevant to the competitive landscape for LinkedIn thanks to BranchOut, the application designed to offer professional networking and recruiting tools for the more than 1 billion registered users of Facebook Inc (NASDAQ:FB). Facebook’s IPO will go down as one of the greater bungles in history and it’s still trying to recover. The chart below shows the kind of year the two companies are having. It’s day versus night:

FB Chart

FB data by YCharts.

The bet on Facebook Inc (NASDAQ:FB) at the time of the IPO was that the company had everything already figured out and the price was reflective of robust future results that were more or less a lock. In hindsight, we know that Facebook Inc (NASDAQ:FB) was extremely overvalued at the IPO and it still has a lot to prove. Now, it doesn’t mean that Facebook can’t or won’t be successful in the longer-term. But LinkedIn Corp (NYSE:LNKD) is eating Facebook Inc (NASDAQ:FB)’s lunch today, and I think it has to do with leadership and its strategic vision.

LinkedIn Corp (NYSE:LNKD) recently offered a presentation at the Bank of America Merrill Lynch Global Technology Conference where investors got a glimpse of management’s four priorities and how they’re guiding the business to the success it’s witnessing today:

Priority No. 1: Talent. LinkedIn Corp (NYSE:LNKD)’s primary product is the talent they funnel to companies. Without a focus on the talent, they might as well just pack it up and go home.

Priority No. 2: Technology. LinkedIn Corp (NYSE:LNKD) is a great example of a business with classic network effects; as such, the platform must scale to accommodate its exploding membership base. Management will continue to focus on this as the number of connections multiplies.

Priority No. 3: Product. The overarching products for LinkedIn offer three main value propositions: professional identity, insights, and working where their members work. Management focuses on developing their products with these targets in mind.

Priority No .4: Monetization. The bull’s-eye here for management is in the talent (also known as hiring) solutions segment which is the largest and fastest growing. The other two drivers are marketing solutions and premium solutions.