“Our checks show increasing traction for LinkedIn’s hiring solutions and improving user engagement that, along with emerging products, suggest a steeper slope to the company’s long-term growth,” the report said. “On a more macro level, we believe LinkedIn is one of the companies best positioned to benefit from growth in mobile usage given its reliance on subscriptions over advertising."
The company, which had 145 million registered members by the end of 2011, benefits from the shift of advertising and recruiting dollars online and the ongoing growth in social networking, especially at a more professional level, the report said.
“On a more macro level, we believe LinkedIn is one of the companies best positioned to benefit from growth in mobile usage given its reliance on subscriptions over advertising,” the report said. “We believe this will be a key factor in driving outperformance in the sector over the next few years.”
Goldman listed “valuation, competition, product and geographic expansion, platform transition and mobile cannibalization” among the company’s risks.
“With a valuation like that of LNKD, expectations for the company’s growth are already high, and we see valuation and these high expectations as the key risk to our thesis,” the report said.
While Goldman does not think the company faces significant competition to throw it from its position as the leading professional social networking site, competition will become a more serious risk as the company expands its hiring solutions business.
Although Goldman sees mobile usage as a driver for value for the company’s hiring services and premium subscription lines, marketing services revenue could dip if users shift from desktop to mobile, the report cautioned.
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