Stephen Foley: Has LinkedIn become an unlikely safe haven?

 

US Outlook: The guys behind LinkedIn are fleet of foot. The social networking site made its sensational stock market debut in May, when bulls chased the stock to double the float price. Quick as a flash, Jeff Weiner has changed the firm's pitch to appeal to the bears that have been in charge this past week.

At the depths of the Great Recession, he says, LinkedIn saw a big spike in activity, as nervous members polished up their CVs and their contacts list, just in case they got laid off and needed to search for a new job.

If the economy is headed for a double-dip, the theory goes, then LinkedIn just got a lot more useful. That pitches our soaraway internet star in the unlikely role of a defensive stock.

There is no denying the strong results that the site posted on Thursday night, its first set of numbers as a public company. The membership is now 120 million-strong and is increasing at the rate of two new profiles per second. It is shooting to be a must-have tool for an estimated 640 million professionals around the world; India is already its second-largest market and Brazil is its fastest-growing.

The company posted a 120 per cent rise in quarterly sales to $121m, about $20m more than had been forecast, and unexpectedly recorded a profit, too. It makes money from corporate recruiters, who pay for access to the membership, from advertisers who place their jobs and other messages on the site, and from members themselves who pay for premium services. It's fast becoming a nice little business. But at $9.6bn, it's worth 20 times this year's revenues. Bull or bear, you can't justify that.

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