LinkedIn is taking care of business
In the business world, this social network rules.
In the rock-and-roll world of social media, icons and legends come and go. It wasn't so long ago that Friendster and MySpace were riding high and filling the proverbial stadiums. Then came Facebook (FB) and Twitter and now Pinterest.
LinkdIn (LNKD), off on the sidelines, is quietly doing its own thing and taking care of business. LinkedIn was early to the social media game and planted its stake in the business and networking segment, methodically setting about owning it.
Most people you know have probably never heard of LinkedIn CEO Jeff Weiner, and they probably couldn't tell you how many users it has (160+ million) or how much money it makes ($522 million in 2011). But most people you know probably use it regularly. What's more, you probably can't name a single site that competes with LinkedIn.
Predictably, the bulk of LinkedIn's user base is in North America, accounting for just over 43% of registered users, followed by Europe at 22.4% and Asia at 14.6%. While LinkedIn users come from every corner of the world, the site is dominated by U.S. members, with over 58 million Americans using the site. Indians are the second biggest users, with just over 13 million. The UK clocks in a distant third with just 8.5 million users.
Despite being its two largest markets, North America and Europe are below the overall growth average as LinkedIn adoption reaches saturation. This points to overseas markets, especially high growth regions like Asia, as LinkedIn's best prospects for continued expansion.
In terms of year-over-year growth, Asia comes in second place at 56.5%, representing about 7.8 million additional users per year, just behind Africa which has close to 73% year over year growth. Looking at raw member growth by country, six of the top ten are in Asia. Indonesia sits at the top of the list with 111% member growth in 2011. China (81.5%), Malaysia (77.5%), Thailand (73.7%), Philippines (71.5%) and Japan (67.8%) also make the top ten.
The tortoise and the hare
The debate about the future of social media and Facebook is in full force, with some arguing that no other site will ever be able to take down Facebook, and others arguing that Facebook's failure to sufficiently monetize the site and lack of a coherent mobile strategy are hastening its imminent demise. Despite Facebook's unfathomable success, people are still unsure. People have doubted Twitter since day one. As Janet Jackson would ask, "what have you done for me lately?"
But LinkedIn seems to linger on the periphery of social media. It gets little press, no hype and no drama. Sorkin will never make a movie about LinkedIn. One gets the sense that LinkedIn is not only here to stay but also putting pressure on its competitors. LinkedIn is where you go to show your work self, Facebook is where you show your weekend self. You go to LinkedIn to show off your professional chops, you go to Facebook to show off your pork chops. Anyway, you get the idea.
LinkedIn beats out Facebook as the most used social networking site of companies to recruit new employees. Roughly 52% of U.S. corporations say that social networks are a valuable tool for finding and recruiting new talent. Eighty-six percent of recruiters cite LinkedIn as the most relevant social network. And fund managers report using it increases their capital raises on average by more than $1 million. Only 51% cited Facebook, followed by Google+ (GOOG) at 26%.
Market share growth
LinkedIn has made mobile a priority, which resulted in a 275% boost in mobile visitors in a single quarter. LinkedIn has apps for the iPad and all major mobile platforms. Mobile visitors now account for almost 22% of total unique visiting members.
There is talk now that LinkedIn has plans to buy Monster (MWW). LinkedIn has been devouring market share, resulting in a frightening 50% decline in Monster's revenue from $500 million in 2010, to $250 million in 2011. News of the possible buyout caused Monster stock to jump 19%.
Twitter recently announced that it was severing API connectivity with LinkedIn, meaning that tweets would no longer feed to LinkedIn user accounts, while tweets originating from LinkedIn will still go to the Twitter feed.
LinkedIn's reported revenue of $188.5 million in the first quarter of 2012, up 101% year-over-year, in no small part due to the success of its "hiring solutions" business, which now accounts for 54% of total revenue. Income, on the other hand, was flat sequentially even though revenue was up 12.4%.
With the market in a bullish posture right now due to the high probability of liquidity injections by the Federal Reserve and the European Central Bank (in some form) LinkedIn is likely to rally into its next earnings report.
I would be cautiously selling puts in the $90 dollar range dated August or later. If the earnings report is good, you get to pocket a nice profit at 2% to 3% of the share price. If the report isn't good, you may get put in the stock at a price that would be a good setup for the next earnings report. An upside breakout above $120 would allow you to follow the stock up selling puts into rising prices.
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