Linkedin goes public this week. The business model of Linkedin is clear from its multiple revenue sources: advertising, subscriptions and recruitment services for businesses and headhunters. See details from the NY Times, Shares of Linkedin Soar on First Trading Day.
Business Insights from the Linkedin IPO
Also noted in this article:
- “With a valuation of $9 billion, LinkedIn is now trading at 584 times last year’s earnings and 37 times last year’s revenue.” The market has very high expectations for the company to live up to.
- The site has 100,000 members with freemium accounts (free accounts), but only “a few thousand customers” for other services” (paid services.) One outsider notes: “LinkedIn will have to maintain the significant fees it charges to corporate and business customers while growing its corporate and business customer base significantly from a few thousand customers today to tens of thousands over the next few years.” That’s a big challenge.
- While profitable in 2008 and 2009, Linkedin showed losses in 2010. Their philosophy is to invest for long-term, not short-term, results. We’ll see how that works as a public company.
The Business Model of Linkedin Succeeds
Nevertheless, congratulations to Linkedin for finding predictable revenues that investors believe in. Hooray for the business model of Linkedin. Let’s hope the company can now deliver.
Read more about the Linkedin Business Model