1-Star Stocks Poised to Plunge: LinkedIn?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, online professional network operator LinkedIn (NYSE: LNKD  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at LinkedIn's business and see what CAPS investors are saying about the stock right now.

LinkedIn facts

Headquarters (founded) Mountain View, Calif. (2002)
Market Cap $12.6 billion
Industry Internet information providers
Trailing-12-Month Revenue $723.9 million
Management Co-founder/Chairman Reid Hoffman CEO Jeffrey Weiner
Trailing-12-Month Return on Equity 2.2%
Cash/Debt $617.1 million / $0
Competitors Facebook
Jigsaw Data
Monster Worldwide

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 74% of the 1,186 members who have rated LinkedIn believe the stock will underperform the S&P 500 going forward.

A few months ago, one of those Fools, CrimsonViking, succinctly summed up the LinkedIn bear case for our community:

The free competition is immense and the business model is unproven. As a user myself, I have never paid the company a dime and see no reason I will do so in the near future, which doesn't bode well for the profitability of the company. Given the excessive valuation and poor prospects for the kind of profitability necessary to maintain it in the long term relative to the S&P 500, I expect LinkedIn to underperform over the next five years.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of LinkedIn and Facebook. Motley Fool newsletter services have recommended buying shares of LinkedIn and Facebook. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


Read/Post Comments (2) | Recommend This Article (2)

Comments from our Foolish Readers

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  • Report this Comment On September 07, 2012, at 12:25 PM, expoiltthespread wrote:

    don't they say the crowds are usually wrong!

  • Report this Comment On September 07, 2012, at 12:27 PM, expoiltthespread wrote:

    one thing for sure...when the insiders are selling, you might want to be on their side. In the last day, Insiders have cashed in on $27 million worth of stock. Eventually this bubble will pop, the question is will the insantiy outlast the shorts pocketbook?

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