Social Networking Sites a Growing Threat to Monster’s Stock

-0.24%
Downside
3.41
Market
3.40
Trefis
MWW: Monster Worldwide logo
MWW
Monster Worldwide

Monster (NYSE:MWW), an online job posting and recruitment service, faces tough competition in the online job search market from three groups of players:

(1) social networking sites like Facebook, Twitter and LinkedIn

(2) niche job sites such as TheLadders.com, BlueSteps and Dice

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(3) Free or low-cost job posting alternatives like Craigslist

Monster’s stock depends on generating profits from employer job postings which have declined over the last two years.  Furthermore, the increasing use of social networking sites for recruitment will hamper Monster’s recovery despite a long-term improvement in the overall economy.

However, there could be an upside of more than 15% to the $11 Trefis price estimate for Monster’s stock if new job posting numbers on North America sites gradually return to the 2007 levels of 1.9 million, instead of a decline to 1 million that we forecast.

Decline in Job Postings

The number of new job postings on Monster’s North American sites has declined from 1.9 million in 2007 to 1.1 million in 2009. We believe this number will continue to decline resulting from an increasing number of competitors and a hiring slump by recruiters.

The fall in Monster job listings is negatively correlated with the rise in the US unemployment rate.  US unemployment has increased from 5% by the end of 2007 to more than 10% by the end of 2009.  During this period, hiring saw a slump, and this affected Monster’s business despite many job seekers hunting for jobs.  Although the job market has started to show signs of improvement, it may still not be sufficient for Monster.

We expect new job postings to reach 1 million by the end of Trefis forecast period.

Further Job Posting Declines Expected

Three reasons why Monster’s new job postings will continue to decline in the North America Career Services market:

1.  Social networking sites are new avenues for recruitment

Companies are networking with prospective candidates through social networking sites such as Facebook, Twitter and LinkedIn. Monster faces tough competition from these sites as HR departments of companies now have their own Twitter and Facebook accounts, where they can post openings as “Tweets” on Twitter or a post on Facebook.

2.  Niche competitors like TheLadders and BlueSteps are also hurting Monster

Monster is also facing competition from niche sites such as TheLadders and BlueSteps. Both these sites target high earners and are quickly gaining followers among recruiters and job seekers.

3.  Free alternatives like Craigslist and job search engines are eroding Monster’s share

Craiglist has increased its presence by offering services for low-paying jobs with free postings in most areas. Job search engines such as SimplyHired and Indeed search the job boards and corporate employment sites to grab every available posting.

15% Upside to Monster’s Stock if New Job Postings Gradually Increase to 2007 Levels

Although we forecast that the number of new job postings on Monster’s North American sites will decline to 1 million, there could be an upside of $1.70 (15%) to the $11 Trefis price estimate for Monster’s stock if the job postings were to gradually increase to 2007 levels of 1.9 million by the end of the Trefis forecast period.

You can modify our forecast above to see how Monster’s stock will be impacted if new job postings on Monster’s North America sites were to increase rather than decrease as we forecast.

For additional analysis and forecasts, here is our complete model for Monster’s stock.