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LinkedIn Corporation Message Board

  • investora2z investora2z Jul 6, 2013 10:54 AM Flag

    A bit of caution will be good

    The stock is looking strong and possibly could challenge the recent highs soon. The volumes have not been robust, and that is an area of concern, but it is still crossing important hurdles with ease. It is surely a darling of the analysts with numerous articles favoring it to other companies like Facebook (FB). Facebook is facing its challenges, and many are predicting that it may lose more younger crowd users to sites like Tumblr and Pinterest. Concepts like multi-lingual platforms being launched by Yappn (YPPN) are expected to catch up. The future prospects of facebook are not so appealing to the analysts anymore. About LinkedIn, the views are remarkably different. The competition in the professional networking is less, and most analysts are positive about its future prospects. The users are expected to remain more loyal on professional networks than social networks. Innovative ideas, better mobile application for Linkedin, better user experience etc. can help the users get better results. The good part is that it is a zero debt company and has around $830 million cash which can be used for future acquisitions / development of its mobile application etc. The only thing which is rarely discussed in detail is the valuation. One rarely sees numbers being crunched for net income or EPS (or P/E!). The difference between trailing P/E (737) and the forward P/E (90) for year ending Dec 31, 2014 indicates expectations that the earnings will multiply several times in the next few quarters. The market cap is $21 billion while the ttm sales are around $1.11 billion (price to sales of ~19). The price to book is also around 21. On an operating margin of 6.3% and net profit margin of 3.54%, it is difficult to explain these high ratios. So the investors can tag along, but an exit strategy should be kept in mind.

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    • I would like to rebut your post:
      Linkedin has a lot of competitions from internet job search companies and platforms, government agencies, staffing agencies... Does Linkedin have a social platform around a single theme? Yes. Has it been profitable enough to justify its valuation and growth expectation? No, Their quarterly growth rate has not been consistent for the past 2 years, and was negative last quarter (-12.74%) compared to the one before that. LNKD has to grow at their 2012 /2011 level to reach GOOG PE by 2017 and APPL PE by 2018. But LNKD 2013/2012 has dropped 60% and LNKD will not reach GOOG PE until 2021 and APPL PE until 2013, and this is without growth decay which is unheard of. Realistically LNKD will not achieve its valuation until after 2030 (and this is a generous figure).

      LNKD is a social media company that sell some services. Nothing else. Worse is their Class B stocks that allow Reid Hoffman to have 61% voting right. Your Class A stocks are nothing.

      Sentiment: Strong Sell

    • Good posting! You're doing your homework.

 
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