Should You Stay on LinkedIn?

LinkedIn (LNKD) announced fourth quarter ended December 31, 2015 total revenue of $861.9 million, up 11 percent sequentially from $779.6 million in third quarter of 2015 and up 34 percent year-over-year from $643.4 million during the same period last year. The company has provided revenue guidance for first quarter of 2016 and forecasts it to be about $820 million.

Impressive growth

LinkedIn declared fourth quarter of 2015 adjusted EBITDA of $249 million, up 20 percent sequentially from $208 million in third quarter of 2015 and an increase of 39 percent year-over-year from $179 million of adjusted EBITDA in fourth quarter of 2014.
The company has also provided adjusted EBITDA guidance for first quarter of 2016 and estimates it to nearly $190 million.

LinkedIn reported continued growth in both its top and bottom lines primarily due to enhanced customer traction for the company’s recently introduced advanced flagship app during December and solid account performance of field sales and ongoing growth of key online subscriptions.

LinkedIn has continued to illustrate robust operating performance over the years with year-over-year growing both the company’s top and bottom lines and mainly due to accelerated launch of newer mobile apps for the customers, helping them to connect globally with vast network of working professionals, sharing their expertise and experience for an inclusive growth of each individual.

A look at the key metrics

The key technology major has superior member value metrics with year-over-year growing member’s count, unique visiting members and significantly expanding member page views. During December, LinkedIn introduced its innovative re-imagined Flagship app which is specifically designed with intent to enable key members to stay connected and well-equipped through an easier, quicker, and highly personalized experience.

The advanced app is at the center of LinkedIn’s member value plan and is believed to be extremely innovative member stage which can be leveraged by the company’s R&D section to continue to test newer functionalities.

The ongoing new efforts of LinkedIn to continuously introduce newer mobile apps for enabling the users to stay connected with their contacts across the globe and offer a seamless connectivity experience is projected to drive sustainable long-term company growth while delivering improved shareholder returns.

Both, the near-term and long-term growth outlook for key technology companies seem extremely robust with notable technological advancements achieved in digital communications with significant bandwidth and impressive enterprise mobility.

These key technology companies have abundant room for growth through strategic partnering with other technology giants to develop unique business models, deliver notable top line growth, and accelerated adoption of fresh technological advancements in the global market.

Going forward, there are several new markets that have significant growth potential in the segment including, cognitive computing, additive manufacturing, cloud computing, IoT, and big data analytics. These key growth market segments are estimated to attract notable prospective investments and continue to drive sustainable long-term sector growth.

The impressive growth opportunities in the global technological market are expected to attract several new players in the fight for market share. However, the well-established technology giants such as, LinkedIn are projected to register healthy top line growth by making the most out of these key investments while delivering attractive shareholder returns.

Conclusion

Overall, the investors are advised to “Buy” equity in LinkedIn Corporation considering the company’s solid financial position and notable growth prospects with impressive total cash of $3.12 billion against smaller total debt position of $1.13 billion, encouraging the company to make future growth investments. The PEG ratio of 1.32 also indicates attractive company growth and better than the industry’s growth average of 0.73. However, the profit margin of -5.56% seems disappointing and indicate no profit but loss.
Published on Mar 16, 2016
By Vinay Singh

Copyrighted 2016. Content published with author's permission.

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