LINKEDIN'S VALUATION HIGHLIGHTS!

VALUATION HIGHLIGHTS

1. Recruitment Services & Job Postings constitute 48% of the Trefis price estimate for LinkedIn's stock.
2. LinkedIn Ads & Marketing constitutes 28% of the Trefis price estimate for LinkedIn's stock.
3. Premium Account Subscriptions constitute 14% of the Trefis price estimate for LinkedIn's stock.

by the Trefis Team

Share Count Calculation & Option Dilution

We have estimated the diluted share count to be around 108 million. This includes 94.5 million shares of Class A and Class B common stock outstanding after the IPO plus 13.1 million shares to account for option dilution. The company has about 16.2 million options at an average exercise price of $5.86. This data is available in the company's S-1 filings with the SEC. Without including the option dilution, the Trefis price estimate for LinkedIn stock would be 15% higher than the present price estimate.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below we highlight key drivers of LinkedIn's value that present opportunities for upside or downside to the current Trefis price estimate for LinkedIn.

Recruitment Services and Job Listings

• Average Revenue per Corporate & Business Customer: LinkedIn charges companies for buying advanced solutions from LinekedIn, such as LinkedIn recruiter, Talent Direct, Custom Company Profiles and Jobs Network. We expect the average revenue per client company for LinkedIn to decline in the short term and increase slightly in the long term from around $22,000 in 2010 to around $23,000 by the end of Trefis forecast period. We believe that many of the incremental corporate customers for LinkedIn are likely to be small customers as many of the large companies already use LinkedIn. These customers are then likely to spend less, which means the average fee could come down instead of going up. However, as the number of registered members on LinkedIn increases, it will benefit corporates by allowing them capture large talent pool for job offerings. This means that the average fee could actually go up in the short term instead of going down. In the scenario where the average fees increases to 30,000 by the end of Trefis forecast period, there could be an upside of around 10% to Trefis price estimate for LinkedIn's stock.

Ads & Marketing

• LinkedIn Monthly Unique Visitors: LinkedIn's average monthly unique visitors has increased from around 31 million in 2009 to 51 million in 2010, and we estimate that it could continue to increase to around 215 million by the end of the Trefis forecast period. The unique visitors growth was more during the recessionary period and beyond. This is because the unemployment rate increased during recession and its after-effect were felt even after recession was over. Hence the unique visitors growth should slow down going forward, as the economy recovers leading to lower unemployment rate. However, if the growth continues, there could be an upside of around 10% to the Trefis price estimate for LinkedIn's stock if the number of unique visitors were to increase to around 300 million by the end of Trefis forecast period. 
• Page views per LinkedIn visitor: LinkedIn's page views per unique visitor has declined from around 24 per month in 2009 to 30 per month in 2010. We estimate that it could continue to increase to around 42 per month by the end of the Trefis forecast period. We believe that LinkedIn will continue to bring out features which will increase user engagement. For example, LinkedIn Polls functionality was brought so that if user answers these surveys, it will help increase page views per user.

About LinkedIn

About LinkedIn
Founded in 2003, LinkedIn connects the world's professionals to make them more productive and successful. With more than 120 million members worldwide, including executives from every Fortune 500 company, LinkedIn is the world's largest professional network on the Internet. The company has a diversified business model with revenue coming from member subscriptions, marketing solutions and hiring solutions. Headquartered in Silicon Valley, LinkedIn also has offices across North America, as well as throughout Europe, Asia and Australia

                                                 

Obama: Jobs Plan Could Help Jump Start Economic Recovery

--Obama says jobs plan could help U.S. recovery take off

--LinkedIn CEO praises Obama's jobs plan

(Updates with comments from President Obama beginning in the 7th paragraph.)

By Jared A. Favole


President Barack Obama on Monday said at a town hall hosted by LinkedIn Corp. (LNKD) that his jobs plan could have enough "ripple effects" to launch an economic recovery as he tried to soothe people struggling to find work.

Obama, citing statistics by independent economists, said his American Jobs Act could create about 1.9 million jobs and add about 2% to the nation's gross domestic product. "That is the kind of big, significant move in the economy that could have ripple effects and help the recovery take off," he said.

He also said his plan wouldn't solve all of the country's economic problems, particularly the housing market.

Obama was speaking at an event in Mountain View, Calif., hosted by LinkedIn, a social-networking website for professionals. He fielded questions on Social Security, health care, taxes and jobs.

While most of the people expressed worry about the country's economic future, the president did receive some praise. LinkedIn Chief Executive Jeff Weiner said President Obama was leading the way with his jobs plan, called the American Jobs Act.

One light-hearted moment during the one hour town hall came when a former Google Inc. (GOOG) executive asked "would you please raise my taxes?" The man, Doug Edwards, played into Obama's hand. The president has been seeking to raise taxes on the wealthy to help pay for his jobs plan. Republicans, and some Democrats, have balked at the idea, saying raising taxes during a recovery will hurt the economy.

"I appreciate the fact that you recognize we're in this thing together," the president said. "We're not on our own. And those of us who have been successful, we've always got to remember that."

Edwards, who used to handle marketing at the search engine, said he has a lot of friends who would also like the president to raise their taxes.

One questioner said he was recently laid off after 22 years in information technology management, and wanted to know what words of encouragement the president has for those out of work.

"You've got skills, you've got experience, you've got a track record of success. Right now your challenge is not you, it's the economy as a whole," Obama said. The president detailed how political unrest in the Middle East and the European debt crisis are affecting the job market. He also said America wasn't the only country where citizens are having trouble finding work.

"The point is, is that economies all around the world are not growing as fast as they need to. And since the world's really interconnected, that affects us as well," he said.

The White House pitched the president's town hall as a chance for him to connect with professionals and other people who have jobs on their minds. LinkedIn has 120 million members worldwide, Weiner said.

The president began the town hall by saying he wanted to learn ways the government can help spark innovation and get people ready to enter the workforce. "How can we prepare our workforce to be able to plug into this new economy?" the president asked.

The event comes during the president's tour of the West Coast, where in addition to holding "town halls" on the economy he is raising money for his re-election campaign. He has taken a more partisan tone in recent days, calling out Republicans by name and saying their vision for the government will "fundamentally cripple America."

The president is trying to garner support for his $447 billion jobs plan and has urged Americans to back the measure and pressure Congress to pass it. But Republicans, and some Democrats, are against raising taxes while the economy is still recovering from a recession.

Obama said Sunday he is willing to work with Republicans "but these games have to stop."

He also said, "And given how high unemployment is right now, we've got to act. We can't just be engaged in the usual partisan bickering here in Washington."

Congress was scheduled to be on a recess this week, but lawmakers haven't solved a dispute over spending that could cause the government to partially shut down at the end of the week. 

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LinkedIn stock below, has the characteristics that have been seen in other past winning IPOs.



This darling of Wall Street bears. LinkedIn (LNKD) is a Mountain View, CA provider of a social networking platform that enables members to share their professional identity online via Linkedin.com.

EPS growth has been outstanding over the past seven quarters, with gains of 233%, 600%, 500%, 700%, 50%, and 43%. During the past eight quarters sales growth has been even more impressive with gains of 100%, 92%, 98%, 107%, 108%, 110%, and 120%. These gains are expected to continue well into the future with 2012 annual EPS estimates of 0.35 which is a 1,000%+ gain year-over-year. This huge growth is the main reason it trades at a 311 P/E which will come down during this bear market but will never be “cheap enough” to the average Wall Street investor.

Take the above growth with the company having 0% debt to shareholder equity, a cash flow of $0.41, and a Return on Equity of 88% and you clearly see why management owns 56% of the shares outstanding and 202 mutual funds already own 99% of the current unlocked float.

On top of these great numbers it is clear Linkedin has bigger ideas as it spends 26.8% on Research and Development. A very impressive number showing they are willing to come up with new products/ideas for the future.