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Facebook’s Affect on LinkedIn

Facebook’s (FB) stock-drop is making things good for those of us who don’t own LinkedIn (LNKD).

One Year Chart

Here’s LNKD’s one-year chart as of May 9th. First note profits were up 150% LastQtr, 100% 2QtrsAgo. That’s great! This is the type is stock we need to own. What sucks is the P/E is 168. 

LNKD is on my radar, so is FB (one client did purchase 100 FB on Friday, unsolicited). Notice in the chart that LNKD traded in the $60s twice last year. I shoulda bought it in November, we woulda got in at around 88 times earnings (that’s still high, and explains why didn’t.

Fair Value

Here’s LNKD’s Fair Value. Assuming the stock’s worth 60 times earnings, its really worth $41 this year.

LNKD is probably worth 40 times earnings in a bad market, 60 times earnings in a good one. $41 would be nice to buy in at but I doubt that would happen. The stock probably won’t go that low.

$60 would be perfect to get in at, I’d probably settle for $65, which is 52 times 2013 profits.

Bottom Line

FB’s drop is putting pressure on other social media stocks. I’d like to buy LNKD around $60 to $65.

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