Facebook vs. LinkedIn: Which Is The Better Social Networking Stock?
Facebook and LinkedIn represent two opposite sides of the social networking market. The former is designed for family and friends, while the latter hosts professional profiles. Both companies are highly disruptive -- Facebook crushed MySpace, and LinkedIn is destroying Monster Worldwide .
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Facebook and LinkedIn aren't direct competitors, but investors might wonder which social networking stock is a better long-term investment. Let's break down these two companies' business models and valuations to see which stock comes out on top.
Members and revenue growth Last quarter, Facebook's monthly active users, or MAUs, rose 14% year over year to 1.35 billion, while its daily active users, or DAUs, climbed 19% to 864 million. Mobile MAUs grew 29% to 1.12 billion. LinkedIn reported that its membership roll rose 28% to 332 million, but only 90 million visited the site on a monthly basis. Although Facebook is much larger than LinkedIn, the companies make money in very different ways.
Facebook makes money through advertising, which accounts for 92.5% of its top line.Mobile advertising revenue accounted for 66% of that total, up from 49% a year earlier, which highlights the company's increasing dependence on mobile users.
LinkedIn has three business segments -- talent solutions (connecting recruiters to candidates), marketing solutions (display ads), and premium subscriptions (which unlock additional features for users).Last quarter, talent solutions accounted for 61% of its revenue, marketing for 19%, and premium subscriptions for 20%. Talent and marketing revenue both rose 45% year over year, while premium revenue climbed 43%.
What the future holds Facebook's long-term future centers around four key operations -- keeping revenue from mobile ads flowing, rolling out more profitable video ads, monetizing its disconnected subsidiaries (Instagram, WhatsApp , Oculus ), and expanding into untapped markets like China.
LinkedIn, which lists China as its second-largest source of growth after the U.S., is redesigning profiles, encouraging use of its unbundled stand-alone apps (Connected, Pulse, Recruiter), and expanding intothe $50 billion business-to-business marketing space via its $175 million acquisition of Bizo.
Valuations and sustainable growth When we compare Facebook and LinkedIn's valuations, a clearer picture of the two companies emerges.
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Facebook vs. LinkedIn: Which Is The Better Social Networking Stock?