- Decoding Monster’s $3.40 Acquisition Price: Is A Failed Turnaround Implied In The Price?
- Monster’s Revenue, EPS Misses Estimates Amidst Acquisition News
- What To Expect From Monster’s Q2 Results
- How Important Is North America For Monster Worldwide?
- Why We Revised Our Price Estimate For Monster By 20%
- Monster’s Stock Drops Over Disappointing Q1 Results, Q2 Guidance
Monster Worldwide’s (NYSE:MWW) stock dipped by almost 20% to a record low after it revised its forecast to reflect a potentially weak third quarter citing weakness in the European markets. The company released its second quarter results last Thursday, reporting profit that more than halved from a year earlier. The company also reported strong bookings from its North American operations, which helped compensate the weakness in the European and Asian markets. Read our analysis of Monster’s second quarter results here.
The company has reportedly hired a financial advisory firm to help it consider “strategic alternatives to improve shareholder value.” It hasn’t disclosed what strategies it is exploring, but said that the discussions were progressing as expected.
Our $9 price estimate for Monster’s stock is almost 50% above the current market price. The company competes in the job market with niche players like careerbuilder.com, jobcentral.com, and with social networks like Facebook, LinkedIn and Craigslist. The company has been trying to increase its presence in the social recruiting space and is organizing summits with employers and college careers centers to increase its foothold in this domain.
Weak Economic Outlook is a Worry
Bookings for the second quarter were flat on a constant currency basis compared to Q2 2011. The Monster employment index US grew by 2% y-o-y in July this year; however, it was down by 6 index points in June. The index showed an upward trend through the year prior to July. The company expects a 10% negative impact on Q3 2012 bookings compared to same period last year.
The European index too grew by a similar y-o-y margin primarily boosted by the German economy. The general picture however remains grim and is expected to worsen in the coming months.
Good Performance by Power Resume Search
The Power Resume Search product which uses Monster’s 6Sense Semantic Search technology has been doing well. The company recently signed a multi-year deal with Kforce Inc. to deploy Power Resume Search across the organization. Monster believes its double digit growth in bookings across North America is backed by increasing customer acceptance of this advanced technology. The company plans to aggressively market the product to increase adoption.
Increasing competition from social recruiting providers and a weak economic outlook means tough road ahead for Monster. However, with increasing popularity of Power Resume Search, the company will be able to stave off some negative impact due to a weak economy.