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A comment on LinkedIn Is Worth $9 Billion? The New Tech Bubble Has Arrived..

Re:LinkedIn Is Worth $9 Billion? The New Tech Bubble Has Arr... by ScottBurson on Saturday May 21, 2011 @02:14PM (#2571326)
I have been reluctant to use "the 'b' word", but I'm afraid this is overwhelming evidence. LinkedIn waited a long time (by late-1990s standards, anyway) before issuing this IPO. Their business is relatively mature; while I don't think they've captured the entire market, even in the US, I think it's fair to say that the size of their ultimate market can now be estimated, and it doesn't look to me like it's more than 10 or 20 times their current revenue. Does anyone have any reason to think it's bigger than that?

If that's right, then yes, they are crazily overvalued at this price. Maybe I will short them at some point.

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Re:LinkedIn Is Worth $9 Billion? The New Tech Bubble Has Arr... by nikcub on Saturday May 21, 2011 @03:57PM (#2571598)
> Does anyone have any reason to think it's bigger than that?

The revenue per paying customer is high, but their conversion rate is low. When the economy picks up again and companies start hiring I can see both of these numbers improving

They currently only capture about 2-3% of the US job search market

They are not yet a mature company, they are still pouring all revenue into sales and marketing, R&D and dev - I think they will only be more mature and start showing the expected 35-40% net in 3-4 years time

They are still only 60% USA and 40% international - a lot of overseas growth to work out

$400M this year, I can see them eventually start leveling out at ~$4-5B a year in revenue where they will have to start coming up with new streams - which is certainly possible.

They could completely wipe out Monster and the others if the next few years work out well

They have a very good brand and large social network and have only really focused on monetizing the job search portion of it to date - there are many other apps that they can layer onto their platform (and they should open up that platform to others who want to build out ontop - I am surprised they haven't)

I think the risk of them not growing into the current price are pretty low. They can show 3 years now of double-or-more revenue growth and exceeding targets.

I can't see any of their competitors grabbing the market that they currently have and the market they are moving into. The LinkedIn brand is strong and if you talk to people the experience of recruiting through it is apparently brilliant. The only problem may be Xing and others in Europe

This IPO is a huge marketing event that will see a one-off big spike in numbers again. Everybody is talking about LinkedIn at the moment - I dug up my old account which I hadn't logged into for 3 years. I must assume that many others are doing the same. They have never had this much press and the marketing value of the IPO must be in the tens, if not hundreds, of millions

I wouldn't short them - no way. I wouldn't buy at this point either - but I can see them becoming a ~$15B company on $500M net and $1.5B revenue company in ~3 years. Their growth and multiples will start tailing back at that point

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Re:LinkedIn Is Worth $9 Billion? The New Tech Bubble Has Arr... by stellar678 on Saturday May 21, 2011 @03:46PM (#2571564)
Kind of a wild guess, but I could see linkedin having a big growth path in rapidly-growing countries that are adding millions and millions of people to the professional class. (China, India, Brazil)
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