Opinions
John O'Connell, CFA
LinkedIn Corporation
LNKD-N
WATCH
Apr 14, 2014
Stock price when the opinion was issued
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A social media which is more difficult to value because of a lack of earnings. Thinks they reported recently and results were disappointing. Have users, but have to figure out a way to make money. There are a lot of expectations built into these names. Very momentum driven. If you want something that is more visible in terms of earnings growth and outlook, a large global industrial name would be a good choice. Also, check out her Top Picks for a good substitute.
Thinks this is something that he would want to own. It is pretty much flat year to date. They are sitting on a large amount of cash, which is a new thing for a lot of these Internet names. Who knows if maybe they’ll start returning some of that cash to shareholders and/or start paying dividends.
He pays for their services and finds them mildly useful. The stock chart looks like a stock that wants to keep going up. He would guess it trades at a pretty rich valuation. His concern would be that people start getting fed up with the constant push to upgrade or they start increasing prices. Not a bad little business and it does fill a need.
This one has rapidly growing sales. About 8 times revenues, though. If it gets forced down to low $100 range, he would seriously consider buying it if it continues to grow in revenues and in profits. It has to invest heavily. It has a first to market advantage.