Linkedin Corporation (LNKD): Recruiting Room to Run

Talent Solutions is also a disruptive force for the traditional recruiting industry. It’s less expensive than hiring a traditional recruiting firm; it’s faster; and it’s easily accessible to even the smallest companies. Additionally, it provides companies with better results than job boards such as Monster.com or CareerBuilder.com. As the online professional network, LinkedIn provides a service of incomparable value to companies.

LinkedIn has a strong growth plan that includes two very important points: international expansion and mobile access. The recruiter platform is already available in French, and LinkedIn plans to roll out German and Portuguese versions in the near future in order to serve the European and Brazilian markets better. This strategy capitalizes on the growing number of job seekers in Europe, as unemployment remains a problem in the region.

Additionally, “Jobs on Mobile,” introduced six months ago, is already seeing traction. 20% of job views and 30% of job viewers came from mobile devices last quarter. As a result, 27% of unique visitors came through mobile apps compared to just 15% in the same period a year ago.

The biggest threats LinkedIn faces come in the form of Facebook Inc (NASDAQ:FB) and Monster. In fact, Monster has attempted to harness the giant Facebook user base through an app it calls BeKnown. The app allows Facebookers (my mom’s term) to create their own professional network, keeping work and play separate.

However, with just 157,000 “likes,” the app doesn’t seem to be catching on. Furthermore, Monster’s declining revenues have caused the company to post significant losses in the last two quarters, thanks to LinkedIn’s disruption.

More recently, Facebook developed its own jobs app, dubbed “Social Jobs Partnership,” that aggregates job postings from around the web. I do not believe this is much of a threat to LinkedIn, because it is, in essence, just another job board. Most job boards fail to address the problems companies have with recruiting. Specifically, companies don’t receive very many quality applicants (according to the Bersin & Associates study). LinkedIn solves this problem by presenting top-tier candidates to companies, which can then pursue those candidates, instead of vice versa.

However, Facebook’s newest tool, Graph Search, does present some useful features for recruiters. Though it’s still in beta, it will allow recruiters to find “friends of friends” and grow their networks organically. Theoretically, recruiters (or anyone for that matter) will be able to search for “friends or friends of friends who graduated from University X with a degree in A, B, or C and are currently unemployed.” That search would populate a list of pre-qualified candidates for a recruiter to explore based on his or her network.

Currently, though, most Facebookers are not too keen on mixing business with pleasure. Facebook is a social network filled with inside jokes, inappropriate pictures, and out of context wall posts. Perhaps a few tweaks from Facebook, or from the public’s use of Facebook, will change that, as recruiters will undoubtedly use this free tool to the best of their abilities. However, it seems as though LinkedIn is relatively unthreatened by Graph Search for now.

It’s not too late

While shares have run up to more than 3.5 times LinkedIn’s IPO price, I don’t believe it’s too late to buy. Astronomical P/E ratios may scare off some investors, after its most recent stellar earnings report sent shares up another 20%. But I’m a firm believer in not selling a company as it makes new highs. I foresee plenty of room for LinkedIn to continue growing its revenues and profits, and to continue making higher highs.

The article LinkedIn: Recruiting Room to Run originally appeared on Fool.com and is written by Adam Levy.

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