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LinkedIn Corporation Message Board

  • jockne40 jockne40 Apr 22, 2013 7:23 PM Flag

    i like the target of 366 on lnkd!

    Another player in the social market space, LinkedIn (NYSE: LNKD), targets a different market. Whereas Facebook is for social use, LinkedIn is for professionals interested in business and careers. LinkedIn’s revenue model is far more developed than Facebook’s. Because it has access to a wide base of detailed information on a huge number of business professionals, it can provide valuable information and access to candidates for businesses looking to recruit. It is disrupting the market in a big way – not only stealing business from online services like Monster, but muscling in on traditional recruitment agencies.

    LinkedIn has been showing impressive revenue growth lately; 2010 revenue was $243 million, 2011 revenue was $522 million, and 2012 revenue was $972 million). But this barely scratches the surface of a worldwide recruitment market estimated at $369 billion. It also has the opportunity to add to its services and widen its revenue stream. The current P/E of 920 may look insanely high, but it is easy to imagine revenue growing to $10 billion within a few years. At a margin of 20%, this gives a $2 billion profit. A P/E of 20 would translate to a market capitalization of $40 billion, just over double the current market cap, suggesting a rise in share price from the current $175 to $366. And this could be just the start of a long term growth story. It is a personal favorite of mine and my largest holding.

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