+ Watch LNKD
on My Watchlist
P/E ratio of 743.
talented management and first mover
time to rise
A little nervous that we might approach prior 52 week lows. Long term buy on this but fear the actual % of users being active is not as high as others suppose. Many folks I know rarely go to sign on. The email requests prod some of them and they only fade back into ignoring the service.
Tremendous growth ahead.
- future trend: online professional networking- stock advisor pick- con: mobile app not user friendly- poor customer service?- CEO weiner has 98% approval rating on glassdoor- innovation in data to match recruiters with job seekers
LinkedIn is a rapidly-growing professional social networking platform that is familiar to many college students and young adults. LinkedIn is quickly proving that its service entails much more than a place to stash a resume, with the company's average monthly number of unique visitors totaling 183 million in 2013, up 45% from 2012. Here are five reasons why I believe the company is poised to continue offer market-beating returns over the next five years and beyond. 1. Purpose-driven business"People matter." These are the words Reid Hoffman, LinkedIn's founder and chairman, uses to describe his interest in the social media phenomena and motivation to start LinkedIn. LinkedIn's purpose, in a nutshell, is to create economic opportunity for every professional in the world (3.3 billion individuals and counting). "I can't think of a more worthwhile purpose than investing in tools that create economic opportunity for people," says LinkedIn CEO Jeff Weiner. So far as purpose-driven businesses are concerned, LinkedIn is at the top of the list with its focus on utilizing social media platforms to empower people economically worldwide. 2. Innovative products and servicesLinkedIn has an expanding arsenal of social networking products to serve a growing worldwide base of professionals. LinkedIn ended 2013 with 277 million registered members, adding 75 million members in 2013 alone (70% of those new members coming from outside the U.S.). The company's product offerings fall into three general categories: Talent Solutions, Marketing Solutions, and Premium Subscriptions. LinkedIn's largest segment -- Talent Solutions -- saw revenue grow 64.19% in 2013 to $859.67 million. Talent Solutions focuses on providing tools (such as Linkedin Recruiter) for professional organizations and enterprises to post jobs and recruit top talent among those in the job seeking pool. Corporate customers under contract with LinkedIn grew 49% year-over-year in the 4Q 2013 to 24,500.In February, LinkedIn announced its $120 million acquisition of Bright, a company specializing in data insights and developing algorithms to help match prospective employers with job seekers. Eduardo Vivas, founder of Bright, shared his excitement of Bright joining the LinkedIn team: "Today, employers complain that there are no qualified applicants, yet qualified applicants often have their resumes overlooked. This marketplace inefficiency called for a technological solution and we resolved to heed that call.... We decided to join LinkedIn because of what we lacked – the ability to apply this technology across the entire economy. We share LinkedIn’s passion for connecting talent with opportunity at massive scale. And we agree that the old models for online recruiting are hopelessly broken." LinkedIn's Marketing Solutions segment's revenue grew 40.3% in 2013 to $362.36 million. This segment generates revenue primarily through outside advertisers and a new option for users to pay for "sponsored posts" similar to Facebook and Twitter. LinkedIn's Premium Subscriptions segment -- built on the monthly and annual premium member subscribers (who receive expanded services on LinkedIn compared to traditional members) -- also saw impressive growth in 2013, with revenue increasing 60.9% to $306.51 million. 2014 will bring the full unveiling of several new offerings from LinkedIn. The company's Sales Solutions segment -- a service for sales professionals to build connections, find leads, and shorten the "sales cycle" -- will become a core component of the business this year. LinkedIn's original content continues to find momentum through its Pulse professional news app (delivering personalized professional news to each user), a new publishing platform for members to publish original content through blogs on LinkedIn, and the company's "Influencers" program, where notable individuals (including Barack Obama, Bill Gates, and Motley Fool co-founder and CEO Tom Gardner) publish original articles on LinkedIn.With an expanding arsenal of tools for professionals around the world LinkedIn is poised, in the words of The Washington Post's Sarah Halzack, "to become the virtual town square for our professional lives." LinkedIn plowed $395.64 million -- or 25.88% of the company's 2013 revenue -- into product development in 2013. Innovation is ingrained in LinkedIn's DNA, as evidenced by the company's global expansion to countries such as China, product development with Sales Solutions and the publishing platform, and ongoing expansion of recruiting services and capabilities. 3. Visionary, experienced, innovative leadership Reid Hoffman -- who founded LinkedIn in 2003 -- continues to serve as LinkedIn's chairman after serving as executive vice president at PayPal. CEO Jeff Weiner joined LinkedIn in 2008, after spending seven years as an executive at Yahoo. In 2011, Hoffman and Weiner both received the Ernst & Young’s National Entrepreneur of the Year Award. Weiner offers a refreshing take on what effective leadership entails. "For me, leadership is the ability to inspire others to achieve shared objectives," says Weiner. "Managers tell people what to do. Leaders inspire them to it." This ethos has helped create a world-class company culture at LinkedIn, which I explore in more detail below. 4. Consistently increasing cash flow productionLinkedIn's relatively low net income ($26.77 million in 2013) and sky-high P/E ratio (which exceeds 900) -- both caused by LinkedIn's extensive investments into product development -- can cause some investors (including me, initially) to write off LinkedIn as a wildly overvalued business. However, LinkedIn's cash flow production paints a different story and demonstrates the full ability of the business to generate and retain impressive amounts of cash.Over the past four years, LinkedIn has managed to grow its base of cumulative registered members from 90.43 million in 2010 to 276.84 million in 2013. This increase in registered members has been accompanied by an average annual increase in operating cash flow production of 43.19% to $436.47 million in 2013. Net sales have also increased at an average rate of 58.35% annually since 2010. Since 2011, LinkedIn's free cash flow has grown at an average annual rate of 55.49% to $139.25 million in 2013. This stellar free cash flow production -- which has helped the company accumulate $2.33 billion in cash with zero debt -- gives LinkedIn sufficient ammo to continue plowing funds into product development, acquire businesses such as Bright, and serve as a cushion should the company or economy fall on tough times. (Although, one could argue that a tough economic environment would actually increase the necessity and overall use of LinkedIn's services.)5. Strong company culture"If you ask me about culture, the first word that comes to mind is transformation," says CEO Jeff Weiner. For LinkedIn's company culture, this transformation boils down to three critical points: 1) Transforming the trajectory of LinkedIn's employees' careers; 2) Transforming LinkedIn and realizing the full potential of the company's platform; 3) Transforming the world by working toward the company's vision of creating economic opportunity for every professional around the world. Weiner and LinkedIn's executive team hold company meetings with employees on a bi-weekly basis, allowing employees to interact with the company's executives in an engaging and relaxed environment. This leadership has helped Weiner garner a 98% approval rating from LinkedIn's employees on Glassdoor, with LinkedIn receiving an employee rating of 4.6/5 based on more than 700 employee reviews. These stellar ratings helped LinkedIn earn the honor of Glassdoor's third best place to work in 2014 among companies with over 1,000 employees. Foolish bottom line...With its expanding social media platform focused on economically empowering the world's growing base of professionals, LinkedIn arguably has the potential to become the most influential and far-reaching social network on a global scale. Few of my college peers will graduate without first starting a profile on LinkedIn and attending a workshop on how to effectively utilize LinkedIn's platform in the job hunt. By focusing on scaling its core mission on a global scale, guided by proven innovative leadership within a world-class company culture, LinkedIn offers tremendous long-term potential to crush the market. The stock is not exactly cheap with a market cap of $25 billion and a P/S ratio of 16.3, but LinkedIn's performance and ongoing innovation have only served to reinforce my confidence in the company's ability to generate value for all its stakeholders (and beat the market in the process). While LinkedIn shares have more than doubled for investors since going public in July 2011, the stock's P/S ratio has been cut in half over the same period. LinkedIn's P/S is quite a bit lower than the P/S ratios of fellow social networking behemoths; Facebook's P/S stands at 22.5, and Twitter trades at a P/S of just under 44.LinkedIn has been able to grow into its valuation up until this point, and I anticipate that this trend will continue over the next 5-10 years. Outperform.
Innovative technology Missy and Family pick
Linked In is finally figuring out how to monetize it's professional social network and they are just starting to get real traction on product / market fit. If you've been job searching recently you know your job search begins and ends with LNKD.
My Recency + Exposure Theory (February)
LNKD is successfully differentiating itself among social media offerings. Its purchases and services, although not perfect are designed to serve all community members participating in enterprises in key ways. To make it beyond four years, LNKD will need to continue to create services businesses and professionals never knew they needed, before a competitor servicing the temp or payroll arena decides to expand their footprint first.
LinkedIn continues to grow as the go to place for job seekers and recruiters. Their ad targeting is awesome and the global appeal continues to grow. LinkedIn has replaced Monster, Careerbuilder and so many other job boards by targeting both active and passive job seekers. It has become the social media site for business professionals.
whenever I buy stocks they drop, when I sell them they go up and since I recently purchased LNKD it will underperform here in the near future. It's amazing how I can control stocks with this talent.
Recent lower price makes this growing business a great time to buy. LNKD should become the primary professional resource for individuals and corporations.
FINALLY some technical deterioration in a stock that is way overdue for some!Actual value $33 at most.
6 signs of a Rule Breaker:1) Top dog and first mover in an important, emerging industry: LNKD is by FAR the top dog in online professional networking. Check.2) Sustainable advantage gained through business momentum, patent protection, visionary leadership, or inept competitors: LNKD has very strong business momentum with 37% membership growth, 57% sales growth, and 63% operating cash flow growth in 2013. Additionally, LNKD's incredibly strong network effect adds to its moat. Check.3) Strong past price appreciation: LNKD's stock price has stalled recently, but it's still up over 100% over a 3 year period, far outpacing the S&P (up 38% over the same time frame). Check.4) Good management and smart backing: Jeff Weiner is a talented, focused, and proven manager with clear strategic goals for LNKD in 2014. Check.5) Strong consumer appeal: A bitt iffy, but I'll still give LNKD a check here. When I was looking for a job coming out of college, having a LinkedIn profile was a MUST. The company is clearly on the mind of users and influencers in its target market.6) Documented proof that it is overvalued, according to the financial media: Probably the easiest check mark of all. A few headlines: "LinkedIn: Why Are Investors Paying So Much For This Stock?", "Why LinkedIn Remains Irrationally Overvalued: A Look At The Numbers", etc... Check.The stock is down quite a bit from recent highs, providing an attractive opportunity for long-term buyers. Green thumb.
Linked In is a well managed company with considerable long term growth potential. As difficult as it seems, ignore the short term gyrations and focus on the long term. It is an impressive prospect.
Bright was hands down the best acquisition option for Linkedin!I personally believed that Linkedin was nothing more than a social network tool for professionals but a terrible place to find jobs.However, by acquiring Bright, which I think is currently the best job search engine out there, Linkedin is set to destroy the competition.Congrats Linkedin!
Maybe getting back in early. Anticipate volatility but definite out perform in a 3-5 year period.
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