LinkedIn's Outlook Depends on the Rise of Recruiting via Social Media

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LinkedIn ( LNKD ) recently became the second largest social networking site in the U.S. after Facebook in terms of visitors per month. The site has become popular as job seekers and employers look to social media for recruiting and to tap users professional networks. The company also benefited from the buzz surrounding its IPO earlier this year and from newer initiatives like LinkedIn Today , Company Pages and LinkedIn Polls that have helped the company increase its user engagement levels. Social media recruiting is a growing market but competition is emerging as well. BranchOut and Monster's ( MWW ) Beknown are professional networking apps on Facebook that will be a strong challenge to LinkedIn in the future.

While we expect the monthly page views per LinkedIn visitor will increase from 37 in 2011 to over 42 by the end of our forecast period, Trefis members predict an increase from 41 to 56 during the same period. The member estimates imply about 10% to the Trefis price estimate for LinkedIn's stock.

We currently have a Trefis price estimate of $30 for LinkedIn's stock , about 70% below the current market price of $101. Refer to our article Why LinkedIn's Fundamentals Don't Support the Market Price on why we remain fundamentally bearish on the company.

New Features Heighten User Engagement Levels

In the last few months, LinkedIn has introduced features like LinkedIn Today, a customized news offering based on the members' choice of industry and relevance, and LinkedIn Skill which helps members stay ahead of the competition by discovering hot skills that other professionals are adding to their profiles. Another application is LinkedIn Poll which helps companies conduct business and market surveys by targeting users based on demographic and professional orientation. Such new features have boosted LinkedIn's monthly page views.

Growth in Recruitment via Social Media

One in every five people begin job searches using social networks like Twitter, Facebook and LinkedIn, according to a recent study by Kelly Services, a workforce solutions provider. This indicates a shifting trend in online recruitment and growth of social media in the overall professional networking space. Burlingame, a recruitment solutions provider, conducted a survey of 800 employers in June and found that 90% of these companies will start recruiting through social media this year.

This is good news for LinkedIn which recently beat Myspace to become the second largest social networking site in the U.S. after Facebook. According to a Comscore report, LinkedIn recorded 34 million visitors in June 2011 up 63% from a year ago while MySpace's visitor count dropped 50% to 33.5 million. But Facebook is still the prevailing leader with 161 million U.S. visitors, up 14% percent from a year ago, and new professional networking apps like BranchOut and Beknown for Facebook will likely put pressure on LinkedIn's visitor page views and user growth.

Our complete analysis for LinkedIn's stock is 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: LNKD , MWW

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