[3am]

Based on there IPO prospectus from sec.gov:

Year; Revenue; Costs; Income 2008; 78,773; 84,282; (4,522) 2009; 120,127; 123,482; (3,973) 2010; 243,099; 223,523; 15,385

expense growth is 46%, 82% yoy. revenue growth is 52%, 103% yoy.

So, you have a company that is growing revenue faster than expenses, has 100% year over year revenue growth, and has just hit the inflection point to be profitable... and you want to place a market average P/E on it?

[3am]

And just to be clear, an incredibly easy ballpark valuation would be to just take the midpoints of the rev / cost growth and go 3 years out... which gives $1.3B revenue on $1.1B costs = $200M profit. A slightly high market multiple on that (18) would still be only $3.6B. And there will be dilution, selling pressure from insiders whose lockup periods will be ending, lumpiness in the numbers... I certainly would not buy LNKD valued at $8B.

But... I will say that I would be encouraged if I were a shareholder by this:

'The company' chief executive officer, Jeffrey Weiner, said in an interview that he wasn't placing much importance on how his company's stock performed on its first day. Mr. Weiner's stake in the company is now worth more than $200 million.

"To be honest with you, I didn't give a lot of thought to what the opening would be like," Mr. Weiner said. "This isn't necessarily indicative of anything. The market will do what it will do. What we are completely focused on is our long-term plans and our fundamentals, and getting that right."'

(http://online.wsj.com/article/SB1000142405274870481660457633...)

[sahaj]

But... I will say that I would be encouraged if I were a shareholder by this

Why else would a CEO say anything different? I've been through an IPO and basically heard the same thing from the CEO.

[Aloisius]

Exactly.

If LinkedIn can make $243M/year selling to recruiters and job seekers in a recession, what do you think happens when we have a global recovery and the inevitable hiring boom comes?

[jordanb]

Might LinkedIn's business be counter-cyclical?

People are going to be 'networking' most intensely when they don't have a job or are worried about their current job. If there are fewer people looking for a job and those people get pulled out of the market more quickly, there's less money to be made from them.

[dirtyaura]

LinkedIn is not likely to make money out of job seekers. Their fastest growing income stream is LinkedIn Corporation Solutions. I'd assume that headhunting is harder during good times, thus I think they are more cyclical than counter-cyclical.

[pbreit]

No. It's a-cyclical...even better.

[blantonl]

I'll tell you what happens. Recruiters and third parties sign up in droves for the sole purpose to spam the userbase, which ultimately drives members away from the site.

LinkedIn earned their 100 million users by providing a professional networking platform where the users could choose who they network with. When the userbase has less of a choice regarding who contacts them, they'll abandon linkedIn as fast as a teenager terminating his MySpace account.

[antidaily]

Recruiters and third parties have already signed up. Everyone uses it. That's the point.

[blantonl]

If that is the case, then where is the revenue growth going to come from?

[nl]

New market segments.

LinkedIn is incredibly successful in IT related markets, mostly in the US.

It's like when Amazon started, it was very successful selling to people involved with the internet in some professional capacity.

[arethuza]

Isn't "make" usually used to describe income (profit) rather than revenue?