LinkedIn's Driving Higher Engagement but Stock is Still Stinky

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LinkedIn ( LNKD ) stands to gain significantly from higher user engagement through its fresh product offerings. We like the company's new initiatives that helped drive strong top-line growth across business segments.LinkedIn's big winner in Q1 was its ads & marketing division that grew by almost 40% in revenues year-over-year (YoY). Going forward, we expect innovative offerings to drive further growth for the division helping the company in the online advertising space against competitors such as Facebook, Yahoo ( YHOO ) and Google ( GOOG ).

We have a revised Trefis price estimate of $34 for LinkedIn's stock , which is well below the current market price. Refer to our article Why LinkedIn's Fundamentals Don't Support the Market Price on why we think the market is getting ahead of itself on the company.

Enhanced User Experience Help LinkedIn's Ads

A key metric we watched this quarter was LinkedIn's total page views, which stood at around 7.1 billion up from its 4.5 billion quarterly average in 2010. The boost in page views is due  to the launch of various new features by LinkedIn that have served to increase user engagement. A couple of these include LinkedIn Today, a customized news offering based on the members' choice of industry and relevance, and LinkedIn Skill that helps members stay ahead of the competition by discovering hot skills that other professionals are adding to their profiles.

Going forward, we retain our page views per unique visitor target of around 37 this year as LinkedIn continues to provide useful add-on features on its site.

Whats Happening for the Employer & Job Seeker?

LinkedIn's growth in the second half of 2011 should be driven by two strong initiatives on the employee & employer side. Firstly, LinkedIn's jump to the mobile app bandwagon has shown strong results, with its mobile page views increasing about 400% YoY.

Given the ever increasing presence of smartphones and tablets, LinkedIn's apps should be a major contributor in increasing job listings for both its recruitment and premium subscription segments. However, competitors are not expected to stay far behind in the app space, such as Monster's recently unveiled BeKnown app.

Another significant feature launched very recently is a new web plug-in: Apply With LinkedIn. Companies can have this button on their own websites where job seekers can directly apply through LinkedIn. This should make the recruiting process easier for companies enabling them to track interested candidates more efficiently.

In the long run, both the above initiatives can provide a strong upside to job listings as well as the number of corporate customers on LinkedIn.

See our complete analysis for LinkedIn stock here



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: GOOG , LNKD , MWW , YHOO

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