It does seem a bit peculiar to start a post with news that a company has quadrupled its profits YOY (up from $5m last year to $22.6m in Q1) and increased quarterly revenues by 72% (to $324.7m) YOY BUT that its share price dived by 10% in after-hours trading.
But, if you are a real high-flyer liked LinkedIn, the market is looking for exponential growth to continue forever. So it is the guidance of ‘just’ $342-$347m revenue in Q2 that spooked the market – they had pencilled in $359m. But, to be fair, if you are a LinkedIn investor a 10% share price ‘correction’ is as nothing compared to the 350%+ hike in Linkedin’s share price (to $201 before the close last night) since their May 11 IPO at $45.
We like Linkedin, as my previous posts have shown. It has a real business model that makes real profits. It’s corporate – rather than ‘consumer’. It has been a real ‘game-changer’ in the recruitment sector. Indeed, we at TechMarketView use it all the time as do almost everyone of our corporate clients. Tools/services for these recruitment operations account for 60% ($184m) of LnkedIn’s revenues and grew by 80% YOY.
But it wants to boost its advertising revenues too. Here it faces the same issues as Facebook as the world moves to small screen mobiles where advertising is much more difficult. So Linkedin is trying all kinds of ruses to get us to visit it more often and spend more time on the site. But I, for one, don’t want LinkedIn to become yet another social media site where I read status updates and blogs. In the corporate sector, Twitter does that for me and in my personal life I’m content with Facebook.
So, in my humble view, LinkedIn should stick with the niche that they are so good at and find new and better ways of earning revenues from that. What they shouldn’t do is try to become another Facebook.