Let me be clear about this:
- I am a HUGE fan of LinkedIn. It is a great tool for recruiters, job seekers and those (which should be everyone) who are looking to maintain their professional network.
- I am not a stock analyst nor should you take financial advice from me
- I have had a paid subscription to LinkedIn for as best I can remember two years.
- I am a client of Monster.com
OK, I needed to get all of that out for these next thoughts starting with:
I call BS on the hype of the LinkedIn IPO.
Yes, this is a good company, in a niche that it mostly owns, with a revenue stream that provides good value to its customers.
No (in my opinion) it is not a $8B - $10B company. It is not worth more than:
One should be wary when analysts start talking about bubbles, Prince and partying like it is 1999.
The difference of course between LinkedIn and Pets.com (or enter any dot com IPO of the 90’s) is that it has users and revenue streams.
So I am going to talk about why I think the hype does not match the reality and for the sake of sticking to what I know will not be talking about price to sales, P-E, price to book, price to earnings. Find that online or from a broker.
To what I think I know…
Users, let’s talk about them for a moment.
CNBC has had a graphic today (May 20th) that says LinkedIn has 100 million engaged users.
WHAT??? Where did they get that stat from? LinkedIn says 100 million profiles. Now do some math. How many profiles are orphaned, not been accessed in the past 60 days, etc? It has to be a chunk, maybe 20%? I would guess it is more.
Revenue streams, let’s talk about them for a moment:
- revenue from employers
- revenue from job seekers
- revenue from ads
As the economy slowly improves we can assume that fewer job seekers will be buying the premium subscription.
We can assume more recruiters will buy a premium account and some employers the recruiter product.
I am not smart enough to talk about traffic and ad revenue.
My point is this, fewer folks creating new profiles or checking on their current profile because of a better economy has a growing employer base contacting a barely growing candidate list.
Side note: But Paul (you are thinking), LinkedIn is adding a new profile every second. Yes they are. How many of them are in the U.S.? How many of them stick with the site? This is the same hype about Twitter. That “x” number of profiles are created never to tweet again. This may not be as much of an issue for LinkedIn but still an issue.
We are already seeing folks in some skill sets frustrated with the amount of recruiter spam they are receiving. That is only going to get worse.
Question: How many millions of folks were hired last month in the U.S.? If you believe the IPO hype it was most.
What a bunch of crap…
Speaking of traffic there a number of stats one can find on users of the social network sites. I am linking to A Look at LinkedIn Users
Hmm... those user numbers look pretty slim for a nearly $10B company.
As a recruiter, as a paid subscriber, can anyone name me one thing LinkedIn has done in the past 18 months to make this a better tool for me? I can think of a few things they have done to make it less user friendly.
I guess I can hope that having all this cash we will see new things but I am not holding my breath.
Who are the winners of this IPO:
LinkedIn founders and employees
Investment banks and their clients
Facebook, GroupOn, Twitter and other sites thinking about going public or seeking funding.
CNBC, Bloomberg and all the other financial talk heads
Some more thoughts:
China blocks LinkedIn (and a bunch of other sites) right?
Who bought this at $122? Likely a retail investor who bought the hype and is going to lose their shorts. At least for the short and mid term.
LinkedIn will have future sales impacted by the economy. Monster, CareerBuilder, etc have all been hit a bit hard in their stock price because of it. LinkedIn will not be immune to it.
5X the value of Monster? (enter expletive here)
Finally, let me call out my Recruiter and HR blogger friends. Where are they on this? They are quick to rant about influence ratings, promote their next speaking gig and talk about HR tech products.
But no conversation on LinkedIn.
If they think this is awesome I would assume they would have been saying so. But nothing. So does that mean they think (to some extent) like I do?
WTH, are they scared???
Because most of you by now think I am anti LinkedIn I am not.
I am anti hype.
What I am is not sniffing the Kool Aid straight from the package like most and actually adding water to dilute it a bit.
Would I buy the stock? Yes, but at a much lower price and for a long term hold.
Would I buy on the hype? No.
Would I buy after the price comes down to earth and as a long term play? Yes.