How LinkedIn is beating Facebook

Once overlooked, the professional networking service is making quiet gains on its rival. Here's why investors and advertisers are paying attention.

By Aimee Picchi Feb 8, 2013 12:36PM

The sign up page of (David Loh/Newscom/Reuters)LinkedIn (LNKD) is finally getting some respect after serving as the Rodney Dangerfield of social networks. 

The company is quietly and steadily gaining fans -- and emerging from Facebook's (FB) shadow -- by exceeding expectations, leading to a nearly 60% gain in its stock price in the last year. The shares were up an additional 18% Friday. 

Friday's boost came after LinkedIn reported fourth-quarter profit and sales that beat analysts' estimates. Revenue jumped 81%, while its user base rose 8% to 202 million people. 

So what's behind LinkedIn's resurgence? Investors are paying attention because the company's business model relies on subscriptions instead of ads or quick transactions. That's made it attractive to investors, despite the fact that LinkedIn's base is a fraction of Facebook's 1 billion users.

As the biggest online professional networking service, LinkedIn is finding it has the power to raise prices, which it plans to do in the second quarter when it will bump up subscription rates, chief financial officer Steven Sordello said on a conference call on Thursday, according to BusinessInsider. 

Facebook, meanwhile, is suffering from user fatigue. People are increasingly concerned about the company's privacy issues and may be simply tired of reading about their friends' lunch plans. 

More than a quarter of Facebook users will spend less time on the site this year, according to the Pew Research Center's Internet & American Life Project. 

Sure, LinkedIn's 202 million members are dwarfed by Facebook's 1 billion global users. But LinkedIn taps into a raw nerve: employment, or lack thereof. Simply put, reading about your friends' winter vacation plans isn't a necessity. But with tens of millions of Americans still looking for work -- or who simply want to find a better job -- LinkedIn is proving invaluable. And advertisers, recruiters and corporations are willing to pay for that.

More on moneyNOW

Tags: Earnings
Feb 8, 2013 5:28PM
Plus, most of the people on LinkedIn have a JOB and therefore might be a demographic with money to spend, unlike three of the Facebook users in this house.
Feb 11, 2013 1:24PM
Oh it’s great. You only get bombarded with job recruiting firms "while at my place of business". LinkedIn is no different than any other social network site. Nobody’s personal information is safe.
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

Trending NOW

What’s this?


[BRIEFING.COM] The stock market began the new trading week on the defensive note with small-cap stocks pacing the retreat. The Russell 2000 (-1.4%) and Nasdaq Composite (-1.1%) displayed relative weakness, while the S&P 500 lost 0.8% with all ten sectors ending in the red.

Global equities began showing some cracks overnight after China's Finance Minister Lou Jiwei poured cold water on hopes for new stimulus measures. Specifically, Mr. Lou said the government has no plans to change ... More