Social Network: Why So LinkedIn?

By EconMatters

Dubbed as the Facebook of business professionals, Linkedin has expanded into more than 200 countries and territories with 101.5 million members worldwide by the end of March. That's 12 million members more than it had at the end of 2010.

SFGate quoted a document Linkedin filed with the U.S. Securities and Exchange Commission (SEC)

Based in Mountain View, California, LinkedIn is a private company, but filed with the SEC on Jan. 27 that it plans to raise as much as $175 million in an initial public stock offering. And in another filing on May 4, the company has chosen to have its IPO with the Big Board--NYSE--under the stock ticker LNKD. Although Nasdaq is typically the more popular listing choice with tech companies, more companies now seem to value NYSE's big company 'blue chip' image branding benefit.

It looks like LinkedIn would be among the first wave to cash in on the social media craze. Renren Inc., China's biggest social-networking site by page views, started trading on the NYSE on May 4. Groupon could launch its IPO as early as second half of this year. Facebook, with two newly minted high profile investors--Golman Sachs and Russia's Digital Sky Technologies--may also go public in 2012.

For Linkedin, 2010 is its first profitable year. According to the company filing, for the full year of 2010, LinkedIn posted revenues of $243.1 million and net income of $15.38 million, versus revenues of $120.1 million and a net loss of $3.97 million in 2009.

However, Linkedin had this to say in its filing:

“We expect our revenue growth rate to decline, and as we continue to invest for future growth, we do not expect to be profitable on a GAAP basis in 2011.”

Facebook is said to be worth $59.4 billion, while a report from last summer put LinkedIn net worth at more than $2 billion. By my rough estimate, both companies are valued at more than 120x P/E multiples, which was one of the reasons I wrote about a Tech Bubble 2.0, but this time in the social networking sub-sector.

Valuation aside, Linkedin is one social network site that could really help job seekers as the company generated almost half of its revenue last year from tools that recruiters use to find job candidates, particularly for tech jobs. The site also has a 'knowledge service'--LinkedIn Answers--where users can answer and also ask a wide range of questions, and receive answers from their connection network and experts who use LinkedIn.

So being Linkedin does have benefits, and this infographic illustrates the scale of its virtual reach, and how anyone may start his/her own global network one connection at a time.

[Source: Online MBA]

EconMatters, May 10, 2011 | Facebook Page | New Post Alert | Kindle

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.