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LinkedIn Corp (LNKD), Facebook Inc (FB): This Stock Is Worth a Look Despite Its Expensive Valuation

Very few companies could offer value for money if they traded more than three times their IPO price, just a little over two years after going public. However, that is not the case for this professional networking giant, which seems to have found the magic in the department of human resource.

LinkedIn Corp (NYSE:LNKD) has defied the odds by maintaining continuous growth since going public when compared to other tech IPOs from the last 2-3 years. Importantly, the company has gained massively while some of its rivals have plunged.

Mark ZuckerbergFor instance, Facebook Inc (NASDAQ:FB) is currently trading 35% below its IPO price of $38 per share. Monster Worldwide, Inc. (NYSE:MWW), which was trading at about $15 per share when LinkedIn Corp (NYSE:LNKD) went public in May 2011 is now down 67% from that price. Monster Worldwide, Inc. (NYSE:MWW) is involved in the business of job listings and advertising. Facebook Inc (NASDAQ:FB), on the other hand, is predominantly known for its social networking business, but launched a jobs app in November last year to compete with LinkedIn Corp (NYSE:LNKD).

Can the “Jack-Of-All-Trades” beat the master of professional networking?

Over the last five years, Facebook Inc (NASDAQ:FB) has proved to the world that there could be no one better in social networking. However, the moment the company went public on May 18 last year, coincidentally just about a year after LinkedIn Corp (NYSE:LNKD)’s IPO, monetization of its massive user base became more important than ever. The company has always maintained that connecting the world remains its priority, but this proved difficult when making losses.

Therefore, the company engineered a monetization campaign, pitting itself against the likes of Google Inc (NASDAQ:GOOG) and Amazon.com, Inc. (NASDAQ:AMZN). Facebook Inc (NASDAQ:FB) launched a gift service, which leans towards e-commerce, Amazon.com, Inc. (NASDAQ:AMZN)’s specialty. The social media giant also launched sponsored stories and Facebook Inc (NASDAQ:FB) Ad exchange (FBX), pitting itself against Google Inc (NASDAQ:GOOG)’s product listing ads. The company went ahead to launch a job-listing app to connect recruiters and job hunters who form part of its massive user base. This again put Facebook Inc (NASDAQ:FB) in competition with LinkedIn Corp (NYSE:LNKD) and Monster Worldwide, Inc. (NYSE:MWW).

Monster Worldwide, Inc. (NYSE:MWW), founded in 1967, and headquartered in New York, launched Monster Worldwide, Inc. (NYSE:MWW).com in 1999 after the merger of The Monster Board (TMB) and Online Career Center (OCC), the two of the first career websites on the internet.

In terms of numbers, Facebook’s massive user base may come into play for its jobs app. However, the company might still find it difficult to attract a majority of its social network service users to using its jobs-listing app. This is because very few people want to mix their social profiles with their professional profiles.

Additionally, Facebook’s business model, which it has recently diversified in a bid to generate income, may be a big hurdle for its jobs app. LinkedIn Corp (NYSE:LNKD) is entirely focusing on enhancing user experience on its platform and recently acquired Pulse, a news-streaming website with over 30 million users, and available in nine languages.

Monster Worldwide, Inc. (NYSE:MWW)’s survey portal plays a huge advantage in job hunting and employment analytics, which could play a part in attracting job hunters and recruiters. Nonetheless, this does not weigh much compared to LinkedIn’s prowess in the business of connecting recruiters and job seekers.

Performance

In the most recent quarter, LinkedIn’s revenue grew 68%. A majority of the revenue comes from talent solutions; that is, 54%, which is widely used by employers in the recruitment process. Marketing solutions account for 26% while the remaining 20% comes from premium solutions.

The bottom line

LinkedIn has solid fundamentals while outlook remains promising. It is hard to point a company that may eventually dethrone LinkedIn from its current position in professional networking. The company has also ventured aggressively in integrating its business with the mobile shift by coming up with an app, which is already bringing in 30% of its traffic. So, LinkedIn is making the right moves and deserves a look even at these levels.

Nicholas Kitonyi has no position in any stocks mentioned. The Motley Fool recommends Facebook and LinkedIn. The Motley Fool owns shares of Facebook and LinkedIn. Nicholas is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article This Stock Is Worth a Look Despite Its Expensive Valuation originally appeared on Fool.com is written by Nicholas Kitonyi.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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