by Tom Taulli | October 24, 2013 12:18 pm
From its launch a decade ago, LinkedIn (LNKD) has held to a singular focus on business professionals. The strategy has worked quite well considering the LNKD market capitalization is now a hefty $27 billion.
But to find more growth and to justify its valuation, LNKD is doubling-down on mobile.
This was certainly on display yesterday as seen with a giddy presentation from the company. Consider that now the mega vision is to become the “global economic graph.” It’s not 100% clear what that means, but I think it has to do with the idea that LinkedIn wants us to spend much of our time with their service. Hey, we live in 24/7 world.
To make this work, LNKD has been launching a spate of apps. In fact, the company announced two of them yesterday. One is a newsreader for the Apple (AAPL) iPad, which improves searches and has rich videos. Then there is LinkedIn Intro, which inserts a sender’s photo, name, company and title in an email. By clicking a drop-down, you can then connect with the person or go to the profile.
It’s an intriguing feature for LNKD, and it does not take up much screen space. This may ultimately become part of a bigger drive to turn LinkedIn into a customer relationship management (CRM) system, which could be a threat to Salesforce.com (CRM).
But there’s a potential problem with Intro: To make it work, LinkedIn engineers had to create a system that actually grabs your email and makes changes to it. This means that a user must agree to creating new certificates, which allow access. However, for enterprise environments, this may be too much of a risk. What if there is a hack with LNKD servers?
But the good news is that LinkedIn seems to be getting serious about mobile — and LNKD is also showing some creative spark.
While problems are inevitable, LinkedIn has time to evolve and experiment. Let’s face it, the company has a huge lead and moat professional networking space. True, Facebook (FB) could try to expand into this category … but it would probably not be easy and would take time.
Despite this, there is a nagging issue for LNKD: Can it keep up the growth? This could prove to be tougher and tougher. For example, there are some groups — like kids and retired people — who simply have no need for LinkedIn. There are also many people who are not too concerned about their careers.
But for Wall Street, the belief is that LinkedIn growth opportunities remain seemingly endless … and that’s why LNKD stock is trading at nose-bleed levels.
However, the company’s efforts to aggressively expand its footprint and its mission are signs that it is worried that the momentum will decelerate, which would certainly be a big-time threat for LNKD stock price.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
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