Vetr Blog

Crowdsourced price predictions for the stock market.

LinkedIn: Priced to Perfection?

For some folks above a certain age, social media can be a bit of a riddle. It’s not that the technology itself is especially difficult to master –apps are usually very easy to operate – but that there isn’t always an immediate answer to the question “why?”

LinkedIn ($LNKD), though, is one of the exceptions. Almost unique among social networks, LinkedIn’s value is immediately clear to even the least-adept social networking Luddite. The company has become enormously successful by essentially creating a web interface around the age-old concept that everyone is connected to one another at some level though their mutual contacts. Brilliant.

The company was one of the first of the mega-social sites to IPO, coming public at $93 in May 2011, and it rose fairly steadily over the next two years. But it’s been a wild ride since then; the stock cratered from its high of around $250 in September 2013 to a low last May of $150, and has surged back up to its current quote around $232.

Despite the volatility, Wall Street remains unabashedly bullish on $LNKD. According to Thomson/First Call, A total of sell-side 36 analysts follow the stock, of which 28 are buys, 10 are holds, and zero are sells.

In contrast, users – generally a pretty tech-savvy bunch – are essentially split on the company. $LNKD earns only three stars on our platform, which translates to a “hold”. Of 15 active ratings, eight are bullish and seven are bearish. Interestingly, however, even our bulls are not that excited; the average 6-month target price for the stock is $235, a mere 1.17% upside from today’s closing quote.

Bulls on the stock cite LinkedIn’s rapid growth, low valuation in comparison to quasi-competitors Facebook ($FB) and Twitter ($TWTR), and high recurring revenue from the company’s software-as-a-service business model. Bears, on the other hand, note that growth is not translating to the bottom line, the stock is priced to perfection, and insiders are selling. In either case, the company has a dominant position in one of the best real-life applications of social networking. The question, as usual, is whether the stock’s price already reflects it.

Where do you think LinkedIn’s price will be six months from now? Make a rating!