After volatile market conditions pushed down LinkedIn’s (NYSE:LNKD) stock to around $75 last week, investors this week boosted the stock back to previous levels to reach a closing price of roughly $85 yesterday. [1] While LinkedIn’s stock continues to outpace peers such as Monster (NYSE:MWW), the debate continues on whether the company is correctly valued.
See our complete stock analysis for LinkedIn’s stock here
Emphasis on Increasing User Engagement is Maintaining Optimism
Since it became public, LinkedIn has continued to stay in the shareholders’ good books through regular releases of newer and simpler product upgrades. Additionally, almost all of these upgrades have revolved around increasing engagement from both users and employers. A recent example last week was the introduction of “company status updates” that would allow interested users to follow their chosen companies even more closely.
High-Expectations from Q3 Results
While we believe that LinkedIn is over-valued at present (Refer to our article Why LinkedIn’s Fundamentals Don’t Support the Market Price on why we think the market is getting ahead of itself on the company), the lack of significant competition to the professional networking giant is ensuring that the stock does not show any south-wards movement. As the company draws close to its Q3 2011 earnings release in November, the stock may ride even further on high expectations.
We currently hold a price estimate of $34 for LinkedIn’s stock, which is well below the current market price.
Understand How a Company’s Products Impact its Stock Price at Trefis
Notes:
