Linkedin Corporation (LNKD), Facebook Inc (FB) and the “2nd Level”

187 million subscribers certainly gives them time to figure it out, when they do—look out.  I’m hoping to buy this stock on any reasonable pullback.

One scary Monster

1st level: “considering those bullish recruiting numbers, let’s buy Monster Worldwide, Inc. (NYSE:MWW) :. The stock is cheap”

2nd level thought: Seriously?

While it’s true that 83% of candidates consider job boards as their primary job search tool, they’re typically searching on Monsters chief competitor—Careerbuilder.com.

It’s funny, at the company’s inception they’d hoped the word “Monster” would be synonymous with a job search, much like “Google Inc (NASDAQ:GOOG)” or “Kleenex” are for searching and snots. But Management has never showed a strategy to grow brand identity in practice; instead they’ve embarked on one lame copycat effort after another.

Management tends to blame poor results on “the economy” because they know it’s an easy target but why then, is nearly every other business in the recruiting services sector thriving?

In just 2012 alone Monster: “imitated” CareerBuilder’s successful source and screen service, when that didn’t work they purchased HotJobs and when that failed they gave a “half-in” attempt to jump on the in social media trend. That social media application (Be-Known) runs through Facebook Inc (NASDAQ:FB) and has a stated goal to “allow people to connect professionally on Facebook Inc (NASDAQ:FB) without mixing business with friends”.

If the goal was to “be the only social media platform that no one in the world has heard of,” they’d be knocking it out of the park. Since it’s not, they look like they’re throwing spaghetti at the wall.

The good book

1st level: Facebook Inc (NASDAQ:FB) users are suffering “Facebook fatigue”

2nd level: “Facebook fatigue” is an opportunity

With 1 billion users, Facebook could potentially dominate the world of online recruiting services. “Be-Known” is a dud but at least it shows that the Facebook Inc (NASDAQ:FB) has identified the potential growth in this area.

A recent study showed users are feeling “Facebook fatigue” with 61% of users saying they recently took time off of Facebook and 27% planning to decrease usage. Mr. Market has also showed fatigue with FB, despite beating earnings estimates for two straight quarters the stock has stayed range bound ($20-$30). They need a “wow” moment.

The largest reason for the fatigue was that Facebook was not useful enough; a smart job search tool could change that.

They should consider an acquisition, one with a mutually beneficial relationship through independent brands (think eBay and PayPal). Debt has doubled (yoy) but so has cash, the company could afford a small buy (perhaps Workday) that would boost growth while keeping its brand insulated.

2nd, is the new 1st

With headhunters and candidates constantly seeking better, more effective tools; few industries are as influenced by emerging technologies as recruiting services. The online recruiting sector is a long-term mega trend, get on the right side of it—and hang on!

The article LinkedIn, Facebook and the “2nd Level” originally appeared on Fool.com and is written by Adem Tahiri.

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