LinkedIn Paying More Attention To Young Users Is A Good Move

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LNKD: LinkedIn logo
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LinkedIn

LinkedIn (NASDAQ:LNKD) is expanding its influence. Besides growing across geographies and bringing more professionals to its platform, the company is also targeting young audience. Following its last year’s move of lowering the age limit, it has now launched certain new tools to engage college students and university aspirants. These tools are primarily aimed at aiding decisions regarding choosing universities, colleges and courses. It is quite clever on part of LinkedIn to engage people at young age and showcase the platform’s utility to them. In all likelihood, many of these young college and university students can turn into premium members or regular users of LinkedIn over the long run.

Our current price estimate for LinkedIn stands at $154, implying a discount of around 25% to the market price.

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Last Year, LinkedIn Expanded Its User Base By Lower Age Limit

Last year, LinkedIn lowered the age limit for its users on the belief that teenagers can benefit from its platform as they apply to colleges and universities. Students who want to plan ahead for their careers can take advantage of LinkedIn’s university pages to know more about the course details, latest developments, and connect with alumni and professors to make better decisions. They can also benefit from LinkedIn’s vast flow of information regarding career options to better plan their futures.

Although the company is still gaining subscribers at a brisk pace, the growth has slowed over the last few quarters. Expanding to a younger demographic will help it sustain subscriber growth, which may be necessary to support its extremely high market valuation. According to U.S. Census Bureau data, individuals between ages 5 and 18  accounted for 17% of the U.S. population in 2013 whereas roughly 6.3% of the population was below 5 years of age. [1] Additionally, about 19.4% of the U.S. population is under 14 years of age. [2] Using these figures, we get a rough estimate of 3.9% for individuals with ages between 14 and 18. Therefore, we make an assumption that teens between ages 13 and 18 account for over 4.5% of the U.S. population. This gives us a little over 14 million individuals, and this is the market that LinkedIn planned to target in the U.S. with its move. However, given that 80% of LinkedIn’s users are international, the overall target user base could be ultimately somewhere around 70 million. Going forward, this figure will grow rapidly driven by increasing adoption of the Internet and growing literacy rates in emerging markets, as well as a higher number of universities and colleges.

Latest Attempt Is Again Targeted Towards Engaging Relatively Young Users

LinkedIn’s newly launched features are targeted towards college students. This is a clever move as it essentially capitalizes on LinkedIn’s potential influence on high school kids and gives them a reason to continue using the platform. Three key features include Decision Boards, University Outcome Rankings and University Finder.

Decision Boards is essentially a social decision making platform which connects aspiring students with people more knowledgeable on the matter regarding right school/college or subjects to study. University Outcome Rankings is an attempt at categorizing and sorting universities based on the how their alumni have done in their careers and which industries or service lines they are associated with. This can help students make more informed decisions regarding their university choices. University Finder is another useful tool that can help students choose right universities based on certain parameters that revolve around their career aspirations and aptitude.

Ultimately, LinkedIn wants as many users on its platform as possible. However, engaging them well is equally important. These new tools are essentially solving both problems at the same time. LinkedIn continues to make user engagement a priority as it will eventually result in more ad dollars. The company has made numerous feature updates and enhancements this year, which appears to be the primary reason behind the uptick in member additions and revenue growth. One of the key changes that LinkedIn made is redesigning the profiles. The company has made efforts to make the profiles more visually attractive and personalized, so that a member’s key skills and attributes are readily visible and organized. LinkedIn is also growing its multi-app portfolio and has launched an app on iOS called ‘connected’. It makes it easy for LinkedIn members to deliver updates and opportunities in a timely manner to the members in their network, thus leading to higher and more meaningful engagement. The publishing platform, that’s still available to a limited number of members, is seeing some traction. LinkedIn stated during its Q2 2014 earnings that the the number of weekly long-form posts have surpassed 30,000. [3]

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Notes:
  1. U.S. Census Bureau []
  2. Index Mundi []
  3. LinkedIn’s Q2 2014 Earnings Transcript []