Markets

Facebook's Ad Business is 30x More Valuable than LinkedIn's

LinkedIn (NYSE:LNKD) and Facebook are two of the best known names for online social and professional networking. We estimate that the online advertisement business accounts for about 28% of our LinkedIn valuation estimate of $3.2 billion while it accounts for 60% of our Facebook valuation of close to $45 billion. This implies that Facebook's online advertising business is about 30X more valuable than LinkedIn's. As a side note, this also implies that Facebook's revenue stream looks a lot like Google's (NASDAQ:GOOG), which earns just over 70% of our near $190 billion valuation from advertising - which is about 7x the size of Facebook's ad business.

Below we stack up LinkedIn vs. Facebook's ad businesses to analyze the large discrepancy. While we acknowledge that LinkedIn's market price is well ahead (almost triple!) our estimate, the current rumored Facebook valuations for the anticipated 2012 IPO range from $70-120 billion - so we are equally conservative on Facebook vis-a-vis the "market." (Facebook trades via auctions and private placements through services such as SharePost, SecondMarket and private equity transactions.)

FacebookMonthly Unique Visitors 10x LinkedIn

We estimate that the average monthly unique visitors for LinkedIn was around 50 million in 2010 while it was in excess of 500 million for Facebook. We expect this number to increase to around 200 million by the end of Trefis forecast period for LinkedIn while we expect the same number to jump to around2 billion for Facebook! While this is an eye popping number, this seems plausible once we consider global population growth and Internet penetration 5 or 6 years from today.

FacebookMonthly Page Views per Visitor10x for Facebook

Although LinkedIn's page views per visitor has increased over the last year or so, it still pales in comparison to Facebook. We estimate that the monthly page views per visitor for LinkedIn was around 30 in 2010 while Facebook users visited the site over 400 times. We expect this number to increase to around 42 for LinkedIn by the end of Trefis forecast period compared to around 470 for Facebook.

However… LinkedIn Revenue per 1,000 Page Views 10x Higher for LinkedIn

This is the only parameter in which LinkedIn beats Facebook. We estimate that LinkedIn's revenue per 1,000 page views was around $4 in 2010 and around $0.45 for Facebook. We expect this number to increase to $5.25 for LinkedIn by the end of Trefis forecast period while we expect it to increase to $0.54 for Facebook.

See our complete analysis for LinkedIn

See our complete analysis for Facebook

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


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

Latest Markets Videos

    Trefis

    Trefis is an interactive financial community structured around trends, forecasts and insights related to some of the most popular stocks in the US. Whereas most finance sites simply give you the facts about where a stock has been and what a company has done in the past, Trefis focuses entirely on the future.

    Learn More