Linkedin Case
LinkedIn Case Analysis
Executive Summary
LinkedIn Corporation went public on the New York Stock Exchange on May 18th, 2011. The Initial Public Offering documents listed the stock at $45 per share. It started trading the next day at an opening price of $83.20, peaked at $122.70, and closed at $94.25. This was an increase of 109.44% over the IPO price. Almost two years later, the stock has had its low points, but still its market price remains well above the value calculated by many analysts.
Critics feel that company’s days of fast-paced growth are numbered. There is also the growing threat of intense competition from Facebook, Google, Monster, and private companies like, Viadeo. We’ve completed a SWOT analysis of LinkedIn in order to highlight some key points. (SEE APPENDIX A) Based on this analysis and LinkedIn’s financial history, we seek to calculate a fair book value for today’s LinkedIn stock, as well as a projection of the stock price in 2016, five years after the IPO. We will use the Constant Divided Growth Model, Valuation by Multiples, and the Capital Asset Pricing Model in our calculations.
Background
Reid Hoffman, Allen Blue, Jean-Luc Vaillant, Eric Ly, and Konstantin Guericke founded LinkedIn in 2002. The company launched in May 2003 as LinkedIn Ltd., but changed its name to LinkedIn Corporation in 2005. They are currently headquartered in Mountain View, CA, and have over 20 offices worldwide. LinkedIn Corporation is the world’s largest professional online network, under the leadership of CEO Jeff Weiner. They have recently attained the 200 million members milestone, with members in over 200 countries, and catering to 19 languages. LinkedIn’s primary purpose is to allow members to “create, manage and share their professional identity online, build and engage with their professional network, access shared knowledge and insights, and find business opportunities, enabling them to be more productive and successful”.
Executive Summary
LinkedIn Corporation went public on the New York Stock Exchange on May 18th, 2011. The Initial Public Offering documents listed the stock at $45 per share. It started trading the next day at an opening price of $83.20, peaked at $122.70, and closed at $94.25. This was an increase of 109.44% over the IPO price. Almost two years later, the stock has had its low points, but still its market price remains well above the value calculated by many analysts.
Critics feel that company’s days of fast-paced growth are numbered. There is also the growing threat of intense competition from Facebook, Google, Monster, and private companies like, Viadeo. We’ve completed a SWOT analysis of LinkedIn in order to highlight some key points. (SEE APPENDIX A) Based on this analysis and LinkedIn’s financial history, we seek to calculate a fair book value for today’s LinkedIn stock, as well as a projection of the stock price in 2016, five years after the IPO. We will use the Constant Divided Growth Model, Valuation by Multiples, and the Capital Asset Pricing Model in our calculations.
Background
Reid Hoffman, Allen Blue, Jean-Luc Vaillant, Eric Ly, and Konstantin Guericke founded LinkedIn in 2002. The company launched in May 2003 as LinkedIn Ltd., but changed its name to LinkedIn Corporation in 2005. They are currently headquartered in Mountain View, CA, and have over 20 offices worldwide. LinkedIn Corporation is the world’s largest professional online network, under the leadership of CEO Jeff Weiner. They have recently attained the 200 million members milestone, with members in over 200 countries, and catering to 19 languages. LinkedIn’s primary purpose is to allow members to “create, manage and share their professional identity online, build and engage with their professional network, access shared knowledge and insights, and find business opportunities, enabling them to be more productive and successful”.
References: Brochet, F. & Weber, J. (2012). LinkedIn Corporation. (Case Study, Havard Business School, 2012) Gobry, Pascal-Emmanuel (2011) This Man Wants to Beat LinkedIn In All the Places that Matter LinkedIn Corp. (LNKD) (2013). Profile, business summary, key statistics.Yahoo!Finance. Retrieved February 1, 2013 from http://finance.yahoo.com/q?s=LNKD%2C+&ql=1Yahoo.com Appendix A