Apple Inc. (NASDAQ:AAPL) and Social Networking
Not long ago, Apple Inc. (NASDAQ:AAPL) ame up with a new concept to try to make their music offerings more social. Today, nobody talks much about the company’s failed Ping add-on to iTunes. That’s because it was generally considered a spectacular flop, quietly removed from iTunes at the end of 2012.
The moral of the story: you can make mistakes if your main business is still really successful, as is the case with Apple Inc. (NASDAQ:AAPL) and its hardware. Facebook doesn’t have the luxury of Apple’s breathing room. Unlike Facebook Inc (NASDAQ:FB), Apple reports massive revenue numbers every quarter; in the most recent it posted a $9.5 billion profit on $43.6 in revenue.
Can Social Media Save Businesses?
If you’re an old-line company, however, social networking may seem like some sort of salvation from the struggles of new media. It could be the halo effect needed to resurrect businesses! News Corp (NASDAQ:NWS). has thought this in the past – that didn’t work out too well with MySpace, the company that News Corp (NASDAQ:NWS) purchased for $580 million seven years ago, then unloaded for $35 million in 2011.
But rumors are that News Corp might go back at it, trying to integrate social media into the publishing business. News Corp is splitting itself into two separate businesses — entertainment and publishing — perhaps because people don’t find publishing entertaining anymore. Stay away from News Corp (NASDAQ:NWS) until they figure this all out.
Even Google…
Google is probably the best example of a company adopting social media elements to its business without causing too much consternation. But with the wonderful financial results that they keep reporting quarter, investors and analysts have little to complain about. Most recently, they reported a 31% year over year increase in revenue.
What’s also notable is that Google is adverse to breaking out numbers outside of advertising – a smart move seeing as how it’s hard to see services like Google+ actually putting cash into the bottom line. But the numbers are showing that Google+ is a solid #2 to Facebook, which is a good place for them to be. Google is a great investment, and the fact that they aren’t flat-out falling on their faces in social networking is more than enough when compared to News Corp.
So Who Has the Blockbuster Stock?
Now, at this point you might think that the prospects for investing in social networking are quite dismal. But there is one company out there that seems to have figured it out. What’s even more impressive is how they have been able to do it under the radar – as far as technology stocks go they fly pretty low. But their growth potential is enormously immense. Take a look at this chart of the most trafficked websites globally.
There are some heavy hitters here, mixed in with a few Chinese companies (that happens when you have hundreds of millions of internet users). But there’s one publicly traded company conspicuously missing here, and it offers both growth potential and users that bring more value than some of these other sites.
Great Strategy, Good Diversification…
I’m talking about LinkedIn Corp (NYSE:LNKD). With a growing user base of professionals, the site offers arguably more to its users than Facebook ever could. And pretty much everyone needs a job – which means they need a resume. That means they need LinkedIn Corp (NYSE:LNKD). When is the last time you looked for a job in a newspaper? It’s no wonder News Corp wants their own social network!
How does LinkedIn Corp (NYSE:LNKD) make money? They do have advertising on the site, but the money mainly comes from add-ons that users purchase to help them grow their network and for human resources to find great candidates. Premium memberships make up a good portion of their revenue, which totaled $325 million in the first quarter of 2013.
Things to Note
This isn’t to say that LinkedIn Corp (NYSE:LNKD) is perfect – some have criticized the company over privacy concerns. But this is an issue that all the companies discussed here have grappled with to some extent. In fact, it’s something that most companies in the digital age will have to deal with as they find new ways to use data to grow.
Speaking of growth, another problem for LinkedIn Corp (NYSE:LNKD) is its ability to continue to post amazing revenue growth numbers. In Q1, the company was able to grow year over year revenue by 72%. Those numbers aren’t sustainable, but the stock appears prepped for long and profitable growth over time. So ignore the noise and get some LinkedIn Corp (NYSE:LNKD) shares- their potential is only limited by the innovations they are able to make on an audience that has much more value than that of social networks like Facebook.
The article Why This Social Network Has Immense Growth Potential originally appeared on Fool.com and is written by Daniel Cawrey.
Daniel Cawrey has no position in any stocks mentioned. The Motley Fool recommends Apple, Facebook, and LinkedIn. The Motley Fool owns shares of Apple, Facebook, and LinkedIn. Daniel is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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