LinkedIn Corp (LNKD): Engagement and Mobile

On a comparative basis, the leading social networking company, Facebook Inc (NASDAQ:FB), generated roughly $1.25 billion from ad revenue alone in the last quarter. Although LinkedIn’s subscriber base is only a fraction of Facebook Inc (NASDAQ:FB)’s 1.1 billion active user base, it’s safe to say that LinkedIn Corp (NYSE:LNKD)’s advertising business hasn’t gotten off the ground yet.

Other social media companies of comparable size, like Twitter, are poised to earn a lot from advertising. However, the company has taken steps to address this by displaying sponsored updates from various corporate customers.

Engagement and mobile

LinkedIn Corp (NYSE:LNKD) continues to add more new innovative products to engage users in its platform. LinkedIn has introduced enhanced search capabilities, signing up more influencers to publish content, as well as newer versions of iOS and Android mobile apps which increased likes and comments per unique user by 40%.

To fast track is mobile presence, LinkedIn acquired Pulse, which is a leading news reader on the mobile and content distribution platform. Pulse’s apps have seen in excess of 30 million activations, and should pave the way for more innovation and user engagement on mobile devices. LinkedIn has seen a slight increase in unique visitors on mobile, which stood at 30% up from the 19% a year ago.

Most importantly for LinkedIn Corp (NYSE:LNKD), the company’s cumulative page views hit a record 11.6 billion in the quarter, a solid jump from the Q4 2012 total page views of 9.8 billion. Heightened levels of user engagement will enable the company to earn more dollars at least from display advertising and content marketing feeds.

The bottom line

The recent sell-off in the company’s shares was a function of the management’s guidance not living up to the expectations of the sell-side. In addition, the company plans to invest heavily in certain areas of its business, which might impact operating margins in the near-term. It might not be a good idea to buy LinkedIn Corp (NYSE:LNKD) stock at current high valuations, at least until the company portrays some strong signs of advertising revenue growth.

The article Should You Buy This Stock After Its Recent Drop? originally appeared on Fool.com and is written by Ishfaque Faruk.

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