Monster (NYSE:MWW) saw a challenging year in 2011, as it battled a tough economy and hiring environment and as peers like LinkedIn (NYSE:LNKD) increased the role of social networking in job recruiting. While the company launched its own social tools in response, including the BeKnown app, 2012 could be even more challenging as social media plays a more important role going forward. A host of apps as well as direct recruiting through company pages on social networking giant Facebook makes Monster’s traditional business model more challenging.
Employment Index Trends Are Worrying
While the European job market certainly improved for most part of 2011, the flat trend in the months of November and December might indicate that the job market may decline further, especially as economic uncertainty still looms in the Eurozone.
Given that macro-economic factors would affect the entire industry, Monster’s priority for 2012 will be to counter LinkedIn’s growth by employing further social tools (LinkedIn already has more than 135 million registered users). The company has upgraded its BeKnown app to further integrate with Facebook, and the app’s role in Monster’s success will be crucial this year.
For 2011, we expect the international career services division revenues to come almost at par with the company’s North American career services. Despite a competitive landscape, we continue to remain bullish on Monster with a $10 price estimate for its stock, which is around 23% above the current market price.