LinkedIn Corp (LNKD)’s Strong Growth Trajectory

With more active users, LinkedIn will be able to attract more display advertisers as well as companies for fulfilling their recruiting needs. And LinkedIn’s mobile presence is improving, but has much more room for growth. The company stated that its talent solutions business is seeing that roughly 30% of all job posts are being viewed on mobile devices, and only 27% of all unique users are visiting the LinkedIn platform from mobile-based devices. Clearly, LinkedIn can and should grow the number of users it receives on mobile to cater to secular consumer trends.

LinkedIn’s social media rival, Facebook Inc (NASDAQ:FB), has a phenomenal position on mobile devices. Facebook Inc (NASDAQ:FB) is made roughly 30% of its advertising revenues, or $375 million, on mobile ads in Q1 2013, and mobile-only users have reached close to a total of 190 million. From these data points, it is very evident that consumers are increasingly turning towards mobile-based devices for accessing the Internet and for using social networking platforms like LinkedIn, Facebook Inc (NASDAQ:FB), Instagram, etc. If LinkedIn Corp (NYSE:LNKD) doesn’t ramp up its presence, or fails to entice users to access its platform on-the-go, the company will be missing out and risks losing potential members to other competing platforms.

Going into earnings; Rosy expectations from the Street

On par with all other social media companies, LinkedIn’s core focus remains in the company’s ability to widen its subscriber base worldwide. More subscribers would translate into more advertising revenue and subscription fees, as well as more job postings and other business services.

Q1 2013 guidance from LinkedIn stood at $305-$310 million. However, the Street is very upbeat about LinkedIn’s prospects and is modeling revenues to come ahead of management’s guidance at $317.1 million, with a consensus EPS estimate of $0.31. Since much of LinkedIn future growth is already factored into the company’s stock price, a slight miss can prompt a big sell-off. LinkedIn Corp (NYSE:LNKD) does have solid long-term growth prospects that enhance the bullish case for the company, but the company’s ability to translate solid growth into meaningful bottom-line numbers remains to be seen.

The article Can Growth Translate Into Profits at LinkedIn? originally appeared on Fool.com and is written by Ishfaque Faruk.

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