What’s the P/E of LinkedIn?

Aug 4, 2011
J. Webster
Comments Off on What’s the P/E of LinkedIn?

Well, it’s only 2,911. Yeah, that’s not too high is it. LinkedIn (LNKD) is about to report earnings for the first time. I’m going to go out on a limb here and say they miss.

With a price to earnings ratio of close to 3,000, the expectations for growth are huge. I just don’t think they’re a 10 billion dollar company. Remember, they’re supposed to make all their money via subscriptions and online advertising. I just don’t think paying for an upgrade is going to help you get a job and soon membership rates will drop off.

Shares of LNKD have already doubled – how much more room to run do they have:

LinkedIn’s shares have already more than doubled from their initial offering price of $45 on the expectation that it’s still in the early stages of establishing itself as an indispensible tool for recruiting workers and exploring new business opportunities. That thesis will gain more credence if LinkedIn can approach the growth rate that it experienced during the first three months of the year: Its revenue more than doubled from the year-earlier period, while its membership climbed 59 percent to 102 million profiles.

Want to read a bull case for why you should buy LinkedIn, right this way, from a former hedge fund manager. The argument can be made that someday perhaps everyone who wants a job will have to have their resume on LinkedIn. That LinkedIn becomes the main source for sharing resumes and finding jobs. I dont’ know. I just don’t think they can corner this market.

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