LinkedIn (NASDAQ:LNKD) recently crossed 20 million members in India, which now constitutes roughly 9% of the company’s global membership base. The milestone showcases LinkedIn’s growing popularity in the country as well as Asia-Pacific, which holds large potential for its future growth. Although LinkedIn is seeing immense success in developed markets, its expansion in emerging markets such as India and Brazil has put some pressure on its overall monetization. At the end of Q1 2013, about 64% of the company’s total user base was international accounting for only 38% of total revenues.  LinkedIn’s priority is likely to be increasing user engagement, which will make its platform more useful and valuable, thus driving up premium memberships.
LinkedIn continues to make efforts to increase user engagement with features such as likes, automated updates, ability to follow thought leaders, endorse each other, etc. This is likely to drive the usage of the site and increase the number of page views per visitor. In addition to this, increased user engagement will enhance the user data that LinkedIn has. This in turn will help in more targeted advertisements that generate higher return on investment (ROI), and hence command higher pricing.
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LinkedIn is not just about recruiting anymore; it is becoming a great platform for marketers to find potential customers for their products through LinkedIn’s tools. The company is launching the ability to add rich media (presentations, photos and videos) for its members, which can help them market themselves more effectively. Going forward, growth from the sheer user base expansion may slow down, and the company will continue to focus on increasing user engagement and better monetization of its platform.
LinkedIn recently made some changes to its search tool that are aimed at making search more convenient and intelligent for the users. With this change, LinkedIn users don’t need to search for people and companies independently, instead they’ll see the relevant lists from different categories as they type in the search query. The bigger picture is that as LinkedIn’s user base grows, the company will need to better organize the data resulting from this growth. There is a great value in targeted and relevant searches. They not only improve the user experience, but also help marketers, recruiters and sales professionals in efficiently reaching out to potential customers and candidates.
Our price estimate for LinkedIn stands at $88, implying a 50% discount to the current market price.Notes:
- LinkedIn’s SEC Filings [↩]