Purpose of this report is to showcase the investors LinkedIn’s current position, its value and its future. This report will allow the investor to evaluate whether they should invest in LinkedIn Corporation.

1. Diluk Perera | Entrepreneurial Finance
LinkedIn
RESEARCH REPORT

2. PAGE 1
Analysis Summary
LinkedIn is the world’s leading professional network service provider in the world which has over
433 million user worldwide and currently used in more than 200 countries. Purpose of this report is
to showcase the investors LinkedIn’s current position, its value and its future. This report will allow
the investor to evaluate whether they should invest in LinkedIn Corporation.
Report has been organized as follows:
 Value- LinkedIn future financial performance summary
 SWOT- LinkedIn has been growing rapidly for past few years, but its revenue growth has
slowed done since 2010. This analysis will highlight thestrengths LinkedIn has to maintain
its position, its weaknesses and threats which could possible allow its competitors steal
LinkedIn business and the opportunities LinkedIn should capitalize on to defeat the
competitors and remain as no. 1.
 Porter’s 5 forces- This will showcase the industry LinkedIn is operating in currently and
how it could change in the future.
 Risks- Risks will be explained which could affect future operational and financial
performance of the company
 Management team-This report will showcase the high caliber of management team
 Investor recommendation
Future Value
According to the financial projections by 2020 LinkedIn earning per share would be $ 8.34 per share
from today’s EPS value which is $1.61. This indicates EPS growth of 418%. As per company valuation
projections LinkedIn share would price at $312.86 in 2020. Current projections indicate Linkedin
will be able maintain 35% revenue growth in the future, hence it will be appealing to growth
investors.

3. PAGE 2
LinkedIn SWOT
Strengths:
Established membership base:
LinkedIn has a strong user base and has been growing rapidly, showcased by the fact that two
members join every second. Now it has more than 433 million users worldwide. Outside US users
now make up over 60% cumulative users indicating LinkedIn’s international presence. Company
has increasingly become a bigger internet platform over time and now have over 187 million unique
users monthly and ranked 22nd among most visited websites in the world.
First mover:
LinkedIn has been established around the world as the most prominent internet platform for
professional networking. An average user spends 17 minutes daily on the website, which shows the
dominance of the website in the professional networking business.
Revenue Model:
Strengths
 Established
membership base
 First mover
 Revenue model
Opportunities
 Integrating
communication
 Publishing &
content platform
 Better advertising
Threats
 Newer social
platforms
 Other internet
platforms
Weaknesses
 Privacy issues
 Ignore some
industries
 Weak presence in
emerging markets

4. PAGE 3
LinkedIn’s has a strong business model, gaining big bucks from 3 revenue streams including talent
solutions, marketing solutions and premium subscriptions. Mostly known as a recruitment portal,
companies spent a lot on recruiting suitable candidates online. Corporate clients has been adding
rapidly at double digit rates and now has more than 18,000 clients. LinkedIn has taken lot of
business from earlier dominant players such as CareerBuilder and Monsters. Its premium members
are growing rapidly every year and big bucks are keep flowing from advertising.
Weaknesses:
Privacy issues/ security vulnerability:
In 2012, 6.5 million user passwords were stolen and published online by hackers. Even though this
only represents 5% of total accounts it showed there is a security vulnerability in the website at that
time, forcing the company to strengthen their security firewalls since people place their personal
information on the webpage.
Ignore some industries:
Even though LinkedIn covers a wide variety of professions, there is inadequate presentation on
niche industries such as artists, actors and singers.
Weak presence in emerging markets such as China and India:
Even though LinkedIn is active in more than 200 countries, most of the users are from USA and
Europe. Website still has not been able to penetrate India and China which represent a huge chunk
of the global market.
Opportunities:
Integrating communication (skype):
Integrating video conferencing over LinkedIn connecting over millions or users with the recruiters
have a huge business potential. And another such initiative would be to allow users to upload video
testimonials to the site. These tools would increase the user engagement and bring more users and
clients to the website increasing its revenue.
Publishing and content platform:
LinkedIn has done a good job ramping its website as a publishing and content platform. Now lot of
business leaders users LinkedIn as an influencers platform and to voice their opinions and speak to
millions of users. This trend has allowed LinkedIn to establish itself as a content publisher on the
web. Slide share and Pulse have paved way for this trend. LinkedIn should further initiatives to
establish itself as a publishing platform which influence users to engage more with the website.

5. PAGE 4
Better Advertising:
LinkedIn advertising business has not reached its potential yet. Online advertising market is huge
and currently they reasonably utilize data from customers to show targeted ads. In 2015 LinkedIn
earned $ 581 million from marketing solutions, however this is a mere fraction compared to big
social media giants such as Facebook which earns billions from advertising.
Threats:
Newer social platforms:
New breed of social media websites such as Instagram, Pinterest, Tumblr and SnapChat have
emerged and are gaining solid ground rapidly every year. All these platforms competing directly or
indirectly with LinkedIn over users and minutes spent on respective websites. And ewer
professional networks with advance features pop up every year. These companies could potentially
steal LinkedIn users if they manage to earn popularity.
Other internet platforms:
Internet website giants such as Facebook and Google have a huge user following worldwide. And
both these companies are now looking to expand their wings to other industries. If they enter
professional social media network business there is a huge risk to LinkedIn.
Porter’s 5 forces analysis
Industry Rivalry-Moderate
LinkedIn has moderate competition in the industry. Currently LinkedIn is the leader and it has a
huge user base compared to its competitors. However in current business context things could
change rapidly in a very short period as customer preferences tend to change quickly. Professional
network websites such as Monsters, CareerBuilder directly competes with LinkedIn for users and
corporate clients. Xing, a popular professional website in Europe, which has same features such as
LinkedIn has been trying to penetrate the world market in recent years. Hence LinkedIn must
always be on its toes to stay ahead of the competition.
Threat of new entrants-Moderate
Possible new entrants could be social media websites such as Facebook, twitter or new job portals
such as Ziprecruiter who has advanced features, IT companies such as Microsoft or customer
relationship management markets such as Salesforce. Since these big companies have the user base
and resources to accommodate high internet traffic they would easily enter the market instantly
taking a piece of business from LinkedIn. Hence although currently LinkedIn is well positioned it
should keep updating features and programs to retain the users.

6. PAGE 5
Threat of Substitutes- Moderate
Job portals such as Xing could very well be a substitute for LinkedIn as it provide same features as
LinkedIn. However LinkedIn’s first mover advantage, huge user base is keeping the competition at
bay. Company is keep updating itself by adding features such as Slideshare and Lynda to always
stay ahead of the competition.
In addition LinkedIn faces indirect threat from Facebook and twitter, since professionals use these
sites to know about their interested companies and to keep in touch. But this is not something
LinkedIn should panic about as it is still the number one choice for professionals for recruitment
and job search.
Bargainingpower of customers- Low to Moderate
Customers are professionals and corporate clients. However since they are not concentrated which
could really impact LinkedIn business bargaining power is low. For example no individual company
represents more than 5% of LinkedIn revenues hence they do not have a high power.
But on the other hand customer preferences could change very quickly if a new portal come into
existence with advance features it goes viral. A good reputation is built slowly but could lose it very
quickly. For example Myspace was the leader in visits in 2007 and by 2008 it started to lose its base
rapidly. Additionally since there is no switching cost users could move to another site very easily.
However since LinkedIn has a huge professional and company base there is a network effect which
make sure users come to LinkedIn as their first choice.
Bargainingpower of suppliers-Low
LinkedIn is in a high position when it comes to supplies. Company could easily find service
providers in this industry.
Risk Factors
Technology issues:
Outdated technology: New Entrants and existing professional network sites are keep updating
their technology, adding new tools and features. If LinkedIn didn’t manage to keep up with the new
features users will get attracted to these other websites. Website performance problems due to
reasons such as server overloads during peak times, security problems, server break downs also
would lead to customers seeking other websites.
Additionally in a case of natural disasters or other catastrophes web service would get interrupted.
Even though company have implemented a disaster recovery program which allow it to use
backups, it is still unable to maintain all the functions. In that case business and operating results
may get affected negatively.

7. PAGE 6
Security measures compromised: In 2012 6.5 Million passwords were stolen and published by
hackers. In such an event clients will lose confidence in the website and reduce the customer use,
which would lead to financial and reputational harm.
Mobile technology issues: No. of users who access LinkedIn through mobile carriers have increased
a lot compared to PC users. There is a threat that if mobile operating systems are updated and they
are not compatible with LinkedIn, some features may not work, which would result in decreasing
users.
User Issues:
Business could get adversely affected if LinkedIn was unable to attract and retain active users. Even
though numbers show huge user base, some users are inactive, dead, incapacitated or fake profiles.
Hence LinkedIn cannot reliably determine active members who could add value to the service. If
they cannot attract enough active users LinkedIn services would be diminished.
Outdated, inaccurate profiles: If users do not provide accurate data full potential of the website
would not be reached and clients will lose the trust in the website.
Possible legal problems:
LinkedIn collect, process, share and disclose personal data which is highly sensitive which are
subject to government regulations and legal obligations. Any failure to comply with these laws
could lead to lose of trust and huge legal costs.
Legal environment changes could affect the business:
Internet privacy and security issues are huge concerns worldwide. If rules and regulations increased
in the future this would prevent LinkedIn from storing, processing and disclosing some data which
would harm the business.
Competition from online professional networksand social media
sites:
Industry is evolving every year and competition getting fierce every day. In addition to existing
competitors and new entrants, Larger and established companies could enter the market which
would directly affect the business.
Unable to attract and retain customers:
If LinkedIn do not attract new users and if existing customers do not update their subscriptions
revenue projects could go wrong. In order to grow continually attract new customers to the
network and provide additional solutions to remaining customers to keep them engaged. And if
LinkedIn do not manage to connect talent with the recruiters effectively on a day to day basis
business would be harmed.

8. PAGE 7
Growth slowed down:
From 2010 to 2015 annual revenue grew from $243 million to $2990 million, which represents a
compound growth rate of 65%. However revenue growth has slowed down every year and as
business mature it will continue to slow down. This means LinkedIn will no longer will be a growth
company and it will not be appealing to clients and growth investors.
Possible staffing issues:
If LinkedIn do not manage to attract world class talent to work for them operating results would
deter over time. And if they do not manage to hire best managers strategically company would lose
its advantage and competitors will get hold off the business.
Acquisition issues:
LinkedIn’s strategy in recent years for growth has been to acquire complimentary companies and
technologies. Identification of suitable targets are difficult, time consuming and costly. The process
of integrating these companies could lead to operating difficulties and unforeseen expenditures.
Due to these reason LinkedIn’s value could diminish over time.
Managementteam:
Jeff Weiner - Chief Executive Officer
Under his leadership LinkedIn rapidly expanded its global platform to 24 languages and 30 officers
around the world, which shows his intention to be truly global brand, which exactly LinkedIn
needs. Before joining LinkedIn he has accumulated tons of experience working for companies such
as Yahoo, Warner Bros. In yahoo managed a division which earned more than %3billion annually
which showcase his ability to manage global giants.
Michael Callahan- Senior Vice President
Before joining LinkedIn he was the Executive Vice President, General Counsel, and Secretary at
Yahoo.
Mike Gamson- Senior Vice President, Global Solutions
Joined in 2007, he currently head global solutions organization across the companies 30 officers.
Previously he worked as the director of product marketing at Advent software and he was
entrepreneur as well.
Kevin Scott- Senior Vice President, Engineering and Operations
Responsible for software engineering at LinkedIn. He has over 20 years engineering experience as a
researcher, engineer, and leader. Before joining LinkedIn he oversaw mobile ads engineering at

9. PAGE 8
Google. And he was responsible for operations and engineering of AdmoB world’s no. 1 platform for
mobile monetization. He has won numerous engineering awards including the prestigious Google
Founder's Award.
Steve Sordello- Senior Vice President and Chief Financial Officer
Before joining LinkedIn in 2007 he was the CFO of two publicly traded companies. He was credited
for turning TiVo’s unprofitable business to a profitable company.
Shannon Stubo- Chief Marketing Officer
She has more than 15 years’ experience in corporate field and worked in world’s most innovative
companies before joining LinkedIn in 2010. She was the Vice President of Corporate
Communications in EBay.
Pat Wadors- Senior Vice President, Global Talent Organization
She leads LinkedIn’s world class HR team. Previously she was the HR head of Plantronics. She also
has experience working as HR Executive Advisor to Twitter. Before that she has 4 years’ experience
as the Senior VP of Human Resources at Yahoo.
Looking at the high caliber of the management team it is not difficult to see how LinkedIn became
the number 1 choice for professionals all around the world. This Management has ton of
experience, skills and the knowledge. Hence it could be recommended investors that they could
have the faith on the management team’s ability to maintain LinkedIn’s No. 1 position.
Recommendation to investors:
Taking all these factors into consideration it would be concluded that LinkedIn has the opportunity
to maintain its position as the leading professional network service provider in the world. However
there are risks and threats in the industry which could harm LinkedIn’s business and make the
current financial projections incorrect.
LinkedIn should keep investing on its product development and acquire companies and products
which would allow it to stay ahead of the market. LinkedIn will be highly valued in the future and
will continue to grow at a 35% rate. Hence growth investors should invest in the company today.