Believe it or not, the professional social network LinkedIn Corp (NYSE:LNKD) is now a vital part of America’s economy. And with America’s economy looking the way it currently does, LNKD stock looks like a strong buy.
While LNKD was by no means the first major player in online job hunting — remember Monster Worldwide, Inc. (NYSE:MWW)? — it was the first to successfully incorporate the social side of that business, learning quickly from the highly addictive nature of Facebook Inc (NASDAQ:FB).
While LNKD stock is by no means battered and bruised — shares are up 30% in the last year and a whopping 500% from LinkedIn’s IPO price of $45 back in 2011 — I’m still bullish on shares of this social network, which is practically being accosted by opportunity.
LNKD: 5 Million Job Openings
LNKD stock bulls should be thrilled with the numbers that came out on Tuesday.
The Bureau of Labor Statistics released its monthly Job Opening and Labor Turnover Survey (JOLTS) today, which tracks the number of job openings in the U.S. economy. The brass tacks on December’s JOLTS number is this: businesses are on an absolute hiring binge.
There were 5 million job openings in December, the most on record since January 2001 — Bill Clinton’s last month in office. Compare that to July of 2009, when there were a measly 2.1 million jobs available, and the economy is looking pretty good.
That’s great news for LNKD stock, because the site makes its money charging prospective employers (and employees) small fortunes.
LNKD: Mastering the Supply and Demand Curve
Let’s take a real-life example. Say you’re a business with one of the 5 million jobs up for grabs. Want to find a decent employee? Mosey on over to LinkedIn, where you may or may not be put out of business for putting out feelers. If you live in New York City, San Jose, or San Francisco, for instance, it’ll run you $499 to post one 30-day ad.
Don’t worry though, LNKD cuts you some slack on a five-job bundle. They’ll only charge you $1,975 for that privilege. And 10-job packs will only cost you $2,950!
“Those are only the major cities,” you’re probably thinking. “They probably take it easy on you if you live somewhere else.”
Here are the one-, five- and 10-job pack rates for LinkedIn for the following cities:
- Chicago; Boston; Washington; Los Angeles; Seattle: $399, $1575, $2,375
- Charlotte, North Carolina; San Diego; Denver; Detroit: $299, $1,150, $1,750
- Wilmington, North Carolina; Bismarck, North Dakota; DuBuque, Iowa; Jackson Hole, Wyoming: $199, $775, $1,250
Where demand is high, the cost is high. It’s basic economics, and it’s working brilliantly. LNKD has grown revenues from $243 million in 2010 to more than $2.2 billion last year. Last week, LNKD reported a blowout quarter, beating top- and bottom-line estimates and growing revenue by 44% from the year before.
Furthermore, Wall Street expects LNKD stock to continue to post 30%-plus revenue growth for at least the next two fiscal years.
With a growing percentage of adults now using LinkedIn each year (28% in 2014 compared to 20% in 2012), LinkedIn is the leader in a growing category. And if LNKD stock continues to perform like it has over the long term, shareholders won’t need to be looking for jobs at all.
As of this writing John Divine held no positions in any of the stocks mentioned. You can follow him on Twitter at @divinebizkid.
