Monster Is Rejuvenating

We believe that Monster (NASDAQ:MWW) may be on the cusp of revitalizing its business. Our current price estimate for the company stands at $7.92, implying a premium of about 25% to the market price. It recently revealed its near term strategy which includes significant expansion in the number of job listings, leveraging social media and adding more flexibility to pricing plans. We believe that aggregating social profiles and jobs will help Monster in expanding its scope significantly and better match employers with job seekers. With these efforts, the company can revive its international operations which have been the primary source of concern. Improvement in international business was visible in Q1 2014 results, when Monster reported slight sequential growth.

LinkedIn (NASDAQ:LNKD) has changed the rules of the game, Monster needs to become more data centric, run efficient algorithms and redesign its user interface to better target the talent acquisition market. Its buyout of social recruiting players Goazaik and TalentBin will help it do just that.

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Monster Will Expand Job Listings And Leverage Social Profiles

Like LinkedIn, Monster is also increasing the number of job postings on its website. To do so, it is going to source jobs from both regular and social sources, and leverage the latest trends in hiring. The company grew the number of job postings on its network in the U.S. from 250,000 in January 2014 to over 1.5 million by mid-May. ^[1] It plans to have more than 4 million job listings across its global network by early 2015. That’s impressive considering the global market for unique job listings could be somewhere between 3 million and 6 million, according to our estimates (see Looking At The Global Opportunity As LinkedIn Expands Its Job Listings). The company is also bringing in social aspect as far as its job advertising is concerned. It will commercially launch Monster Twitter Cards in July 2014.

Monster will also increase the flexibility of its pricing options. In second half of 2014, it plans to add duration and pay-per-click options to cater to the needs of customers who want variable pricing for job listings. Additionally, it is also enhancing the candidate search count. It recently acquired TalentBin which has enabled access to more than 100 million aggregated candidate profiles from social platforms, as well as its own database. ^[1] This will help the company target passive candidates as well.

International Operations Can See A Revival

Monster’s sales in Europe and Asia have declined in the past due to adverse macroeconomic conditions and growing competition from new recruiting platforms such as LinkedIn. Additionally, local competitors have strengthened their position over time and have made it difficult for Monster to sustain its market dominance. The threats are real and significant, but the company has recognized it. It has been restructuring its international operations to improve its profitability and focus its marketing resources on specific markets. Monster has sold 49% of its stake in JobKorea and has formed a joint venture with Alma Media in Europe. The downsizing of business will reduce losses and may prove effective in the long run as Monster revamps its platform. In fact, the company has stated that the joint venture is turning around the losses in the Eastern and Central European regions. ^[2]

Monster’s revenues from Europe were up 1% sequentially in the first quarter of 2014. ^[2] The region has faced challenging economic environment in the last couple of years, but it appears that Monster’s business is stabilizing. The company is strategically investing in key markets of Germany, U.K., France and Sweden. Recently, GE’s CEO mentioned that Europe’s economy has stabilized although its expansion remains slow. ^[3] This coincides with the trends observed in Monster’s results which suggests that its business can revive as the economy picks up. According to European Commission’s forecast, the GDP for European Union, which comprises of 28 countries, will grow by 1.5% in 2014 and 2% in 2015. ^[4] The figures for euro zone, which consists of 18 countries, are expected to be 1.2% and 1.8% for 2014 and 2015 respectively. ^[4] As the economy expands, job opportunities will increase. The spur in economic activity will help monster expand its recruitment business. In fact, this has already started happening.

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1. Monster Worldwide Reveals Strategy to Drive Growth and Enhanced Value for Customers, Job Seekers and Shareholder, Monster Press Release, May 14 2014 [↩] [↩]
2. Monster’s Q1 2014 Earnings Transcript [↩] [↩]
3. GE CEO sees signs U.S. economy improving, says Europe stabilized, Reuters, Mar 10 2014 [↩]
4. Taking Europe’s pulse, Economist, Mar 6 2014 [↩] [↩]