Next week, when LinkedIn is likely to begin offering its stock for sale, the 8-year-old company could find itself worth $3.3 billion.
According to filings with the Securities and Exchange Commission, a total of 7.84 million shares will be offered to the public at a price estimated to be somewhere between $32 and $35 a share. Of the total, LinkedIn will sell 4,827,804 shares, while existing stockholders, the venture capital investors, will sell the balance.
At the upper end of the price estimate, LinkedIn would be worth more than half again as much as Monster. (Stock held by the founders, other early investors, and executives, totals 89,547,185 and is factored in the total company valuation.) Monster’s market cap today is $2.04 billion.
Now why compare to Monster? Because increasingly LinkedIn is emerging as a social networking job board.
The company’s updated prospectus — it first filed for an IPO in January –shows its revenue from recruitment services has been steadily growing over the years. Last year, recruitment accounted for 42 percent of the company’s total revenue.
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As recently as three years ago, recruitment was the smallest share, behind revenue from premium subscriptions and marketing products. In 2008, recruitment was 22 percent of total company revenue.
In the prospectus supplement, LinkedIn noted that its Corporate Solutions — the recruitment product bundle sold to employers — increased 85 percent from 2008, when the product launched, to 2009. Between 2009 and 2010 the number of Corporate Solutions customers increased 144 percent. At the end of 2010, LinkedIn said it had 3,900 Corporate Solutions customers.
LinkedIn also reported that it turned a profit last year, earning $15.4 million on revenue of $243 million. Its prospectus suggests that it expects to be profitable this year, noting that it doesn’t anticipate using any of the capital from the offering to fund operations. Instead, LinkedIn will use the money “primarily for general corporate purposes, including working capital, sales and marketing activities, general and administrative matters and capital expenditures. We may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses that complement our business…”
To me, this is exciting and troubling. Linked-In is a great source for us ‘headhunting’ types. However, if it becomes known as THE recruiting source to folks who aren’t in recruitment, then it will be just that… and the non-recruiting people will start to leave rendering it useless for me and others in our line of work. So here’s my plea to all others in the recruiting space: Please don’t hassle the passive candidates too much!!
I’m going to by shares because they can only go one way, IMHO.
Recruitment is LinkedIn’s raison d’etre, and its almost inevitable, again IMHO, that either Google, Microsoft, or Facebook will end up buying them out before they are public for two-years.
They are the Gorilla in the space, but watch out: they have been making aggressive noises and they may be getting ready to rip some faces off.
I couldn’t agree more with John’s appraisal of Linked In as a Job Board in Social Media clothing. Don’t get me wrong – I think what Linked In has accomplished by evolving their business platform from a Sales and Business Development networking site to a leading Job Board in the Recruiting space is phenomonal. I wish them huge success with their IPO…
If you’re a recruiter with 10-15 of experience, ask yourself what difference LI is in importance to say Monster of 10-12 years ago. Pealing away the outer skin of LI, you’d pretty much have to conclude not much. Aside from job postings, of which research tell us only gets a 3-4% response rate on job boards, we’ve probably realized much greater Rrecruiting success by searching Monster’s database of resumes for our candidates. LI is used in just the same way.
If you see Monster with a valuation of $2B, I would guess that once the hype and emotion of the IPO settles – we’ll see similar numbers for LI. If Monster decides to also offer in-mail connections to its database of resumes in addition to their advertisements (job posts)- they could continue to be very stong competitor to LI. Even if Monster stays with their current course of offerings – with the other job boards out there – Dice, CareerBuilder, Niche Boards, etc – LI will certainly have stiff competition in the job board space.
…oh by the way – my previous post is in no way a BUY recommendation for LI… 🙂
Linkedin is a great tool, however like a hammer, it is only as useful as the skilled person who is using it… Best, B-
K.C.
I see your raison d’etre as a job board, but I raise you one inestimable difference: people keep update their detailed and structured profiles on LinkedIn IF THEY ARE LOOKING FOR A JOB OR NOT. Unlike job boards, LinkedIn is positioned as the place to keep your professional online presence as a matter of basic career behavior and consideration for others, (who may be checking your creds)-the same purpose as a business/calling card, updated for the Internet age.
The hiring function and the recruiting industry have helpfully recognized LinkedIN as the defacto system of record for professional information and so given implicit permission to everyone to stay current on LinkedIn, but as passive candidates; the light sweet crude of talent.
Without getting academic about employment status v. job success, posting on LinkedIn has a higher perceived social value than posting on a job board. I would say that difference should double or more the valuation of the best job boards, because the value of the talent available (everyone) is a qualitatively more valuable to the market that demands it.
Facebook remains a deadly threat to LinkedIn if they can figure out a way to create a professional side of their property, because you rarely see LinkedIn considered in the duopoly of Facebook/Twitter except in the presence of a dozen lesser social networks.
LinkedIn has had no choice but to focus on employment, but there will be tension to not become too focused on it, so as not to risk stigmatizing active members as people looking for a job, or too connected to be valuable as an employee (yes Virginia, that can be a problem).