I still rate LinkedIn as the greatest networking and recruitment tool I’ve seen in my time.
But guess what. Sell your stock!
I first wrote about LinkedIn in February 2013, explaining where I thought LinkedIn was heading when the share price was $US100, and it’s now almost $US250 at the end of September 2013.
I’m not a share trader or a stock broker – but I am a customer.
After a 12-month subscription, I am not renewing my Linkedin Recruiter accounts for my business, yet I’m a huge fan of LinkedIn. So that’s roughly $5000 per licence that I’m not spending with LinkedIn and I reckon that a lot of customers will feel the same.
So to me, their sales will drop significantly and LinkedIn will have to find another business model for recruiters. If you are looking for job applicants, job slots on LinkedIn are a waste, so place your ads for active candidates on Seek. LinkedIn is about passive candidates which you need to directly approach and pull into your network.
Also, the value of retaining the activity of your staff and knowing what they have done on LinkedIn adds no value to a company as the relationships will always lie with the individual person not the company, so the value of being ‘Big Brother’ on LinkedIn offers no value. Recruitment is a relationship game. So we are going back to individual accounts with LinkedIn at a much cheaper rate.
In my opinion, 80% if not more of LinkedIn’s value is still free. Inmails are terribly over rated – they are spam if used incorrectly, and I feel more than 90% of Inmails are used incorrectly. We only successfully used 10% of our allotted Inmails which we paid for. That means that we overpaid by 10 times.
The search functionality is great, but the whole purpose of LinkedIn is to take the conversation ‘offline’, and this is done by connecting with people individually with thought and authenticity, not through spam.
So why sell the shares now? Depends on your strategy, but when I see a core revenue stream with a future downside potential, they will need to reinvent. So there’s a huge risk and the future potential is, in my opinion, over-inflated.
I do, however, see LinkedIn as a long-term investment, but not at its current rate of growth. There will be a correction at some stage. It’s currently valued at 700 times earnings – that’s a lot of future potential to live up to!
Groupon crashed from $US20 to $US2 although bounced back to $US12, but doesn’t have a P/E with no sustainable long-term business model. It has to keep reinventing itself to make the most of the millions of customer email addresses it has. eBay and Google are long-term successfully growing stocks, which currently trade at around 27 times earnings. I think LinkedIn will actually be a long-term stable growth stock and settle around the same P/E range.
So I would suggest you take your LinkedIn profits now, or leave some in the game, wait 12 months for some readjustment, and more financial data, and then look to get back in. The stock may still rise for another six to 12 months but I foresee danger, so I’d be happy to jump off the rollercoaster while it’s still heading in the right direction, despite missing out on some potential growth. In fact, the market can be slow to react, so I wouldn’t lose sleep if you forgot to sell your shares for a week or a month.
So while LinkedIn is still hot, it’s not as hot as Tinder is right now! For those who don’t know, Tinder is what I call a ‘fast-food’ dating site – geo targeting potential matches and it feeds off Facebook.
With a quick sign up, you can see who is ‘hot or not’ along with ‘what’ and ‘who’ you have in common on Facebook. You can swipe ruthlessly right or left, ‘hot or not’ based on a few Facebook pics. Your hot matches enable free chat and you’re off to the races from there. All for free.
So why is Tinder so hot? If you’re single, married, de-facto or whatever, it’s socially acceptable to at least try our Tinder. It’s hilarious how simple and ruthless it is, and is growing so fast there’s no shortage of ‘hotties’ on there – even within three miles from where you are.
Surely Mark Zuckerberg is loving watching Tinder play out. I’m sure you saw the movie The Social Network. This is ‘hot or not’ in action! Facebook will buy Tinder – even if just for sentimental reasons for Zuck.
Tinder is revolutionising the dating site business and is a social experiment which highlights how 90% or more of the success of your profile on a dating site is based on your physical appearance. As superficial as it sounds, would you rather hang out with someone who is initially hot or not? It’s not for me to answer – the market has spoken.
So this is the lesson. I’m getting better at seeing patterns emerge as my experience and insight grows. Every time someone revolutionises an industry, there is a market correction as customer spend shifts and advertising spend shifts, so it’s important to see these patterns and recognise when to enter and exit a market or a stock trade.
Tinder – enter (when available). LinkedIn – exit and then re-enter. RSVP – exit. Facebook – enter but be watchful. Google and eBay – enter. Groupon – exit. While you’re at it, think about how you can revolutionise your industry!