Here's Why LinkedIn's Drop Is a Buying Opportunity

LinkedIn has dropped this year due to a weak outlook, but it can be a good long-term buy.

Jul 21, 2014 at 1:30PM

LinkedIn (NYSE:LNKD)  has become a standard for millions of people to maintain their professional identity. The company has redefined social networking for professionals to the extent that employment solution companies such as Monster Worldwide (NYSE:MWW) are struggling to keep their user base intact. LinkedIn is struggling this year, however, and its shares are down 26% due to a weak fiscal 2014 outlook. The company is trying to beef up its platform features, and this might help it get better.

A feature-laden platform is driving results
LinkedIn's financial performance has been strong. It released robust results for the first quarter, with a 46% increase in revenue from the year-ago period. The company's fundamentals are also sturdy, with zero debt and $2.3 billion in cash. It can use this to its advantage by enhancing the experience it delivers to users, in addition to making acquisitions to expand its portfolio.

The company is trying to deliver more than just a digital resume for users. It is focusing on providing a rich portfolio of their experience, skills, and knowledge, enabling them to project themselves in a comprehensive manner. Recently, LinkedIn launched a new version of "Who's Viewed My Profile," enabling members to gain actionable intelligence on how they can build their professional brand. 

After the success of its exclusive "Influencers" program, the company has scaled up its professional publishing platform. This will enable its members to better define their professional identity. The Influencer program is a tool that allows MNC's to reach a professional audience in an ideal context. LinkedIn has received a positive response from its users for this feature. It has also launched a new Recruiter app for Android and iOS.

Growing the user base
LinkedIn is improving its HR solutions further and aims to grow its business to the point where it powers half of all of its customers' hires. Although this is not an easy task, management has various strategies under its belt to achieve this. One such strategy is to increase the volume of job opportunities available on LinkedIn and improve the relevance of those opportunities for its members.

The acquisition of Bright in February is a step in the right direction and will increase the number of jobs available on LinkedIn. In addition, LinkedIn is also seeing growth in its job seeker subscription rate. According to management, "As members and engagement grow, we continue to improve our visibility into a multi-billion dollar long-term opportunity where LinkedIn powers the majority of customer hiring, across employers of all sizes." 

LinkedIn's marketing and sales solutions are also improving. The company has surpassed 3,000 active customers running Sponsored Update campaigns, many of which are renewals from last year. In the first quarter, it launched a new "Lead Recommendations" feature into Sales Navigator, enabling sales professionals to identify the most relevant prospects in their networks.

The company has been working hard to expand its presence globally along with increasing its user base. Consequently, it has launched its beta site in simplified Chinese which will help the company increase its member base in the country.

Currently, LinkedIn has four million English-language members. After launching its new Chinese website, it now has access to another 140 million professionals and students in China. According to CEO Jeff Weiner, "While it is still very early, we are pleased with our progress in China and remain focused on developing the LinkedIn team, brand, and local Chinese product." 

Better than the competition
An increasing user base and features such as Sponsored Updates will allow LinkedIn to bolster its advertising base. The company is seeing strong engagement levels, incremental spending, better retention, and bigger deals. The social nature of LinkedIn's platform has worked to its advantage as it has been able to take away share from traditional job portals such as Monster.

Monster has struggled in recent times. Its first-quarter revenue declined 6.5% year over year, while earnings dropped close to 59%. However, Monster is making moves to integrate a social element in its business to compete with LinkedIn. It recently acquired social recruiting technology companies TalentBin and Gozaik.

According to Monster, Gozaik will enable it to connect users and job opportunities by increasing the distribution of job advertisements across social channels. TalentBin will complement this service by giving resources to employers to search for active and passive candidates across social media platforms. 

The bottom line
LinkedIn has a stronger user base compared to Monster. It has redefined the way employers connect with job seekers, and how professionals connect among themselves. LinkedIn has continued to innovate its platform with new additions, and this will work to its advantage in the long run. The company's stock might have taken a beating so far this year, but considering that its earnings are projected to grow at 34% for the next five years, it might be a smart buy on the drop.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Mukesh Baghel has no position in any stocks mentioned. The Motley Fool recommends LinkedIn. The Motley Fool owns shares of LinkedIn. 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 Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information