LinkedIn's (NYSE:LNKD) recruitment services and job postings business accounts for around 50% of our $30 price estimate for LinkedIn stock , making it the most valuable business for LinkedIn. Under the recruitment solutions business, LinkedIn not only provides recruitment tools to help corporations identify the best matches from a large pool of passive candidates, but also provides simple job listings services. In this market, LinkedIn directly competes with Monster (NYSE:MWW). But this is only one part of LinkedIn's operations. LinkedIn also competes with social networking portals like Facebook and Twitter, as well as Google (NASDAQ:GOOG) and Yahoo (NASDAQ:YHOO) in the online advertising market.
Job Posting Prices Could Increase in the Near Term
We estimate that the average price per job posting on LinkedIn declined from $150 in 2008 to $135 in 2010 due to a growing mix of jobs posted outside of the U.S. and Europe where job post prices are lower. However, we believe that this parameter will increase in the near-term as economic recovery in the U.S. and Europe spurs a more favorable mix of higher priced job posts, an opportunity LinkedIn can leverage to raise prices.
Over the longer term, the higher mix of LinkedIn registered users outside the U.S. and Europe will likely drag average pricing down somewhat. You can tweak the trend-line in the interactive chart above to determine the impact of changing job posting pricing on LinkedIn's stock value.
Our $30 price estimate for LinkedIn stock suggests that current market valuation is unjustified (see LinkedIn's Valuation as Facebook of Recruiting Hard to Justify ).