LinkedIn Borrows a Winning Play From Facebook

With its stock having roughly doubled in the last 12 months and its powerful three-pronged business model humming alone nicely, it's been a banner year for LinkedIn  (NYSE: LNKD  ) and its shareholders.

And while the company's valuation is about as lofty as they come, at nearly 22 times revenue, it truly seems LinkedIn is a rare example of a company with a powerful business model built to stand the test of time.

The company only reinforced this point recently by announcing that it plans to borrow a strategy from its social networking brethren Facebook and roll out sponsored advertisements in users' news feeds. This opens up another major revenue opportunity for LinkedIn's advertising solutions segment, which although growing more than 30% year over year, is LinkedIn's slowest-growing segment. But that isn't the only win with this recent news. Further incorporating advertisements could also provide some nice secondary benefits to LinkedIn's broader business, as Fool contributor Andrew Tonner explains in the video below.

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9/26/2016 11:49 AM
LNKD $192.69 Down -0.10 -0.05%
LinkedIn CAPS Rating: ***
FB $127.30 Down -0.66 -0.52%
Facebook CAPS Rating: ***