Investment Thesis: Company Name: LinkedIn Corporation (LNKD) Human Networking has been around since the dawn

of civilization, but the technological developments in the internet age has opened up a whole new dimension of creating networks and employs it for the benefit of social and business users. The year 2010 has been an extraordinary year for social networking sites.LinkedIn which has the focused market approach is going to be an area to watch for in the coming year. LinkedIn was incorporated in Delaware in March 2003 under the name LinkedIn, Ltd. and later changed its name to LinkedIn Corporation in Jan 2005. LinkedIn (LNKD) went public on May 18, 2011 and its share started trading on NYSE from the very next day. The initial offer price was set at $45 per share, valuing the company at $4.32billion. Social Networking sites provide a platform that allows users to construct a profile, create a personal network, search, invite and communicate with other users. LinkedIn is a variation of social Networking model that was constructed around the idea of connecting and harnessing business relationships. The key revenue streams for the company are 1) Selling recruitment services to employers, 2)Selling premium advertising 3) Selling premium subscriptions to employers and users.The growth driver is going to be the growth in paid subscribers and advertisers. The company will compete with in recruitment solution space while it competes with social networking portals like facebook, twitter,Google and yahoo in the online advertising market.

Source: Security Registration statement filed at SEC by LinkedIn on 17 May 2011


100% 45% 50% 0% 33% 22% 2008 38% 32% 30% 2009 Hiring Solutions

25% 33% 42% 2010 Marketing Solutions

30% 32% 38% 2010(3m) Premium Subscripitions

21% 30% 49% 2011(3m)

The above table shows the contribution of revenue stream to total revenue in percentage.

Prepared by Sujith Menon (24/5/2011) Mailme:

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Any untoward change in the same or laggardness in the company s ability to come out with innovative ideas could push the company out of its business. The company stores and processes personal information of users in its system. could seriously harm the business viability of the company. if the security measures enabled by the company are compromised or if the attacks degrade the interest of the members to access/use the services of the website.The key driver for the business is membership growth.7X (multiple)impactof membership addition on the revenue. The membership is expected to grow at about 30% p. of shares Prepared by Sujith Menon (24/5/2011) Mailme: Considering LinkedIn to be a growth focus on has company.17 519. The company s future prospects are based on its current technology platform as well as its adaptability and integration ease with communication devices.0million on a base of present 100million users as per LinkedIn forecast. Any changes in these regulations could harm the business.7X).6991 52wk low: EPS: PE: Dividend: Yield: beenapplied forecasted 80.a roughly about 3. The growth in registered membership* is about 60% in 2010 has contributed to 102% growth in revenue (1. Source: Quotemedia. LinkedIn had revenue of $78 millionin 2008. In the three months ended march 2011 the revenue has grown to $93. 2. The company has considerable competition in all areasof its revenue streams. The company has recorded revenue of 243.02 b Today 5d 1m 3m 1y 5y 10y Volume: 2009 and $243million in 2010.69 m earnings.The site presently has about 100 million users and derives most of its revenue through advertisers and premium services provided to its users and Page 2 . The key risk area for LinkedIn: 1. The membership is set to grow at a rate 30% and considering 1.45 (Total No. 4.4 million. the 2011 revenue is estimated to be $367 millions. From 2009 to 2010 the net revenue increased by $123million or 102% and the net income grew by 19.9million compared to $44.the 52wk high: 122.7millionsame period last year. with net income of 15. which is subjectto government regulations related to privacy.4million or 487%.1 million in 2010. 3. There is a visible shift in contribution from premium subscriptions to hiring solutions. The website works on the internet platform which is inherently vulnerable to hacking. The company sites a probable dip in 2011 sales in the registration statement filed with SEC. The Enterprise Value of LinkedIn considering the current market price of $95.00 0. $120million in Market Cap: 9.40 N/A N/A 3.

References& Sources: 1. 2.11b = $8.linkedin.627) and the cash balance on the balance sheet $106mcomes to $9.outstanding:-94. Therefore the forecasted LinkedIn EV/revenue multiple figures out to Prepared by Sujith Menon (24/5/2011) Mailme: sujithmeno@gmail.01b .shareholder.3X. Attachments& References: Financials of LinkedIn sourced from sec filings. http://www. The LinkedIn valuation looksvery expensive considering the industry s EV/revenue of 3.8X for Apple & 4.nyse.$0. Security registration statement filed at SEC by Linked: http://files.html http://investors.9 for Page 3 .

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