Facebook Inc. (FB), LinkedIn Inc. (LNKD): Money vs. Value

Facebook Inc. (NASDAQ:FB) and LinkedIn Inc. (NYSE:LNKD) are two social-network sites that have gone in opposite directions since their respective IPOs. LinkedIn has been on the NYSE for about a year longer than Facebook has been on the NASDAQ, but the business model for LinkedIn Inc. (NYSE:LNKD) has been much more appealing for investors and analysts than the model posed by Facebook Inc. (NASDAQ:FB). And about the same time, these two companies announced new steps to add to their models – one designed to gain revenue and the other to gain value for users. And one analysis looks at the possibility that one move may help one company where it needs it, while the other may actually fall short in establishing value for the other company.

Facebook Inc. (NASDAQ:FB) is on the radar this week for introducing “Sponsored Stories” for its 1 billion users, where those who have a “very important” post that want to ensure the post reaches the news feeds of every friend, would pay a nominal fee for the posting. The more friends a user has, the more it would pay to guarantee the post makes every friend’s feed. This has been tested in 20 other countries and just rolled out in the U.S. in the past few days, designed to be a new source of revenue for the company.

Analyst Larry Barrett wrote, “Facebook’s pay-to-display scheme probably will find some takers — depending on the price — among the child-photo-sharing and Spring-Break-updating crowd. But then again, chances are most of the people who would actually consider paying to barnstorm their friends’ news feeds probably are long on time but short on the expendable cash required to sustain an extended self-promotion campaign.”

On the other side, LinkedIn Inc. (NASDAQ:LNKD) announced a new value-added feature to its 175 million users. This new concept would give users the opportunity to follow about 150 “influencers” – such as Richard Branson, President Obama or even LinkedIn Inc. (LNKD) founder Jeff Weiner  – though the details about the who, how and why are still being worked out. The intention is that since LinkedIn users are more “professional” and older on average than Facebook Inc. (NASDAQ:FB), providing access to these leaders would draw users back to the site more often and stay longer on the site, which would add to the company’s visibility with advertisers.

“On the surface, LinkedIn’s new feature smacks of a snoozefest waiting to happen and probably not particularly engrossing to the majority of its users who are either too busy working or looking for work to nestle in for Richard Branson’s musings on whatever,” A skeptical Barrett wrote.

Facebook Inc. (NASDAQ:FB) investors – like billionaire fund manager George Soros of Soros Fund Management – will certainly be looking for new ways for the company to make money, while those who invest in LinkedIn Inc. (NYSE:LNKD) – like billionaire Israel Englander of Catapult Capital Management – might appreciate at least an attempt at increasing value of subscriptions.