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Should Investors Dump Facebook Stock for LinkedIn?

LinkedIn Corp. (Nasdaq: LNKD) just reported fourth-quarter earnings that blew away Wall Street estimates, a nice addition to its already impressive resume — and one that is making LNKD much more attractive than Facebook stock.

LinkedIn earned 35 cents a share, nearly triple the 12 cents earned in the same quarter a year ago. Net income soared 60% to $11.5 million, up from $6.9 million. Revenue jumped 81% to $304 million up from $168 million. Analysts were looking for 19 cents on revenue of $280 million.

U.S. markets accounted for 62%, or $189 million, of Q4 revenue. That was down 2% from the previous quarter. But international growth was robust, kicking in $114.6 million to LinkedIn's bottom-line.

CEO Jeff Weiner called 2012 a "transformative year."

"We have exceeded our own expectations by a wide margin," CFO Steve Sordello said during a conference call.

Shares surged $12.11, or some 10%, to $136.20 after hours Thursday following the report. The rally continued Friday with shares climbing another $26, or almost 21%, hitting an all-time high of $150.25 intraday.

Since its May 2011 initial public offering at $45, shares have more than tripled.

A Possible Star in Social Media?

The strong quarter marked the seventh consecutive quarter in which LinkedIn handily beat analysts' forecasts on both earnings and revenue.

Its success has made LNKD the Wall Street darling in an otherwise disappointing sector of social media – with Facebook Inc. (Nasdaq: FB) and its stock being one of the biggest disappointments.

A handful of social media companies have made the recent transition from private to public company, such as daily deals site Groupon Inc. (Nasdaq: GRPN), social game site Zynga Inc. (Nasdaq: ZNGA) and the social networking behemoth Facebook. Yet they have not fared nearly as well as LinkedIn. All are trading below their IPO price and their stocks' performances have been uninspiring at best.

FB is currently trading roughly 25% below its May 18, 2012, debut price of $38, a level it has not seen since.


Facebook and LinkedIn's Websites are similar in that both are aimed at connecting people with similar interests, but their target audience and members are vastly different.

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