Despite its blockbuster earnings report, now is not the
best time to buy LinkedIn, according to Ken Sena, analyst at
“The story itself is a great one. You continue to see shares gains and margin expansion, but I think the stock is trading six times its 2013 revenues,” he said. “Even assuming they stay on course, a lot of that upside is already in the stock at this point.”
And there is a lot of upside. The shares are up 89 percent since its IPO in May 2011.
The networking site’s fourth-quarter results came in far ahead of estimates, earning 12 cents a share, up from 5 cents a year ago and nearly double the 7 cents a share expected. Revenue also more than doubled from the year ago quarter, coming in at $167.7 million.
Behind the numbers, LinkedIn has been able to corner the
strictly business brand that competitors like
Facebook and Grouponhave not.
Indeed, it is not “friends,” but revenue from companies that made the most impact on revenues; which grew 136 percent in the past year to $84.9 million from recruiting alone.
“I think people using LinkedIn are putting up a very
professional ‘self,’ and so companies feel much
more comfortable using LinkedIn versus Facebook to target
employees,” said Sena.
Job seekers are taking notice. The site added 14 million new profiles last quarter, bringing its total to 145 million.
“When times get tough, we see a number of people
turning to LinkedIn for help,” said CEO Jeff
Weiner in a separate CNBC interview Friday. “And from a
hiring solutions perspective, we’re unique.”
Still, as a value investor, it may be difficult to justify a “buy” rating on a stock at six times revenues, and around 760 times earnings — even for a very young company.
Weiner responded, saying: “We leave the valuations
to the marketplace. We focus on the fundamentals. We’ll
let the valuation take care of itself.”
Additional News: LinkedIn Outperforms on Earnings, Revenue
Additional Views: LinkedIn Earnings Bode Well for Hiring and Social Media
CNBC Data Pages:
Neither Ken Sena nor Evercore Partners owns shares of