I would guess that almost every HotViews reader has a LinkedIn profile. I would also guess that the tiniest minority actually pay to use LinkedIn where subscribers are mainly concentrated on the recruitment/headhunter sector. C66% of revenues comes from recruitment tools and premium subscriptions – the remainder from advertising.
But, unlike many social networking ventures, LinkedIn has a viable business model and is growing – fast. Maiden results since its IPO show Q2 revenues up a very substantial 120% to $121m and profits of $4.5m were reported. So it’s a ‘proper’ business with revenues and profits – what will they think of next!
The IPO really boosted user numbers - unique visitors per month increased 83% to 81.8m. Indeed, LinkedIn’s current share price is now about twice its $45 IPO price. Our argument about LinkedIn is not about whether it has a viable business model – it does (although either FaceBook or Google+ could easily provide a competitive product if they put their mind to it). Our concerns centre on valuation. With annualised revenues of about $500m, LinkedIn has a current valuation of $9billion or 18-times current revenues. It’s going to take a long run of consistently good results to make that look justified.
