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 |
$7.52 billion |
| Industry |
Internet information providers |
| Trailing-12-Month Revenue |
$358.5 million |
| Management |
Co-founder/Chairman Reid Hoffman
CEO Jeffrey Weiner
|
| Trailing-12-Month Net Income Margin |
4.4% |
| Cash/Debt |
$372.1 million / $0 |
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 88% of the 814 members who have rated LinkedIn believe the stock will underperform the S&P 500 going forward. These bears include sickchinaman and hominaray.
Just last month, sickchinaman tapped LinkedIn as a rather stale selection:
Having been a linkedin user for years, I noticed that the activity level on the site is almost non existent. Sure there are a lot of members, but only a few actively use this service. ... [V]ery skeptical on how this company can be profitable and don't see much prospects with linkedin's premium membership service.
In fact, LinkedIn currently sports a particularly lofty price-to-sales ratio of almost 21. That represents a clear premium to fellow professional community operator Dice Holdings (NYSE: DHX ) (3.3), as well as other potential threats like Monster Worldwide (NYSE: MWW ) (0.9) and Google (Nasdaq: GOOG ) (5.0).
CAPS member hominray elaborates on the bear case:
Like shooting fish in a barrel. Don't know where to start on this one.
Linked in has capitalized on a niche area of so called social networking. The main problem with it is that the product itself (the website, interface, etc) is almost blatantly bland and niche it has filled is one that can (and I'm guessing will) be filled by a stronger player in the market (can you say Google for business?) .
The only thing it has going for it is that it is really the first one in this niche, but that doesn't mean anything when your product lacks any compelling reason to use it (hello Friendster, Myspace).
What do you think about LinkedIn, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
Interested in another easy way to track LinkedIn? Add it to your watchlist.
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