LinkedIn Corp (LNKD), Facebook Inc (FB): A Bullish Second Quarter for These Social Networks

For most investors, LinkedIn Corp (NYSE:LNKD) is extremely expensive in terms of financial valuation. It is currently trading at as much as 20.3 times its sales and more than 100 times its forward earnings. However, since its IPO in the middle 2011, LinkedIn Corp (NYSE:LNKD)’s share price has been on the rise, from $93 to $213. Recently, it experienced a significant daily increase of 7% to nearly $228 in after-hours trading, thanks to its second-quarter results.

Impressive second-quarter earnings with higher guidance

LinkedIn Corp (NYSE:LNKD) grew its revenue by 59%, from $228.2 million in the second quarter last year to around $363.7 million. Revenue was up in all three business segments. The Talent Solutions segment was still the largest revenue contributor, with $205.1 million, 69% higher than last year, while Marketing Solutions and Premium Subscriptions enjoyed growth of 36% and 68%, respectively, in revenue.

Its net income came in at $3.73 million, 32.7% growth compared to the second quarter 2012. Its adjusted EPS came in at 38 cents per share, beating analysts’ expectations of 31 cents per share on revenue of $353.9 million. With the bullish momentum in the second quarter, the company raised its 2013 outlook. For the full year, its revenue expects to stay in the range of $1.45 billion to $1.47 billion, with the adjusted EBITDA being around $340 – $355 million.

LinkedIn has the highest user value

LinkedIn Corp (NYSE:LNKD) reported to have around 238 million members. Consequently, with the total market cap of $25.2 billion, each LinkedIn Corp (NYSE:LNKD) member is valued at nearly $106. Each LinkedIn member is valued much higher than each Facebook Inc (NASDAQ:FB) member. Facebook currently has around 1.15 billion monthly active users. While it’s trading at $37.50 per share, Facebook Inc (NASDAQ:FB) is worth nearly $90.25 billion. The market values each Facebook Inc (NASDAQ:FB) user at $74.50.

LinkedIn Corp (NYSE:LNKD)’s social networking site is mainly for professionals, giving users opportunities to network based on careers and professions. Thus, LinkedIn’s users could accept to pay for the premium upgrade for better professional networking and better contacts. On the other hand, Facebook Inc (NASDAQ:FB)’s networking is much more general, so it would be harder for Facebook Inc (NASDAQ:FB) to charge its users. Hence, it still derives much of its revenue from advertising.

Yelp Inc (NYSE:YELP), another social working site, enjoyed a significant one-day rise of more than 23.2% to $51.50 per share. The market felt good about Yelp Inc (NYSE:YELP), mainly due to a narrower loss in the second quarter 2013. It managed to grow its revenue from $32.7 million to $55 million, while the loss has been shaved from $2 million to only $878,000. The number of unique users grew 38%, from 78 million in the second quarter last year to 108 million. With a total market cap of $3.32 billion, each Yelp unique user is valued the lowest among the three, at $30.70.