LinkedIn Looks Richly Valued, Barron’s Says (LNKD, QPSA, RENN, SINA, UNTD)

Tickerspy’s Social Networking Index

SOCIAL NETWORKING INVESTING IDEAS

• Popular long ideas: GOOG, SINA, RENN
• Popular short ideas: GOOG, LNKD, SINA
• Top dividend plays: UNTD
• Pro favorites: GOOG, LNKD, SINA

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SOCIAL NETWORKING COVERAGE

These companies run online businesses with significant exposure to social networking.

• Momentum Already Slowing For Google+? (GOOG, LNKD, RENN, QPSA, SINA, UNTD)
• Social Media Stocks Headed For Bubble Heartache? (LNKD, GOOG, NFLX, SINA, RENN, QPSA, UNTD)
• Smooth Sailing For Google+ To Start (GOOG, LNKD, UNTD, SINA, RENN)

SOCIAL NETWORKING CHART

SOCIAL NETWORKING METRICS

Avg. Market Cap:	$53.2B
Avg. P/E Ratio:	42.6
Avg. Div Yield:	1.1%

Shares of LinkedIn (LNKD), the social networking site for professionals, are fractionally higher today despite comments from Barron’s that due to the newly public stock’s lofty valuation, there may be more downside to come. Those comments followed JPMorgan’s downgrade of LinkedIn on Monday to “neutral” with an $85 price target, which is well below where the shares currently trade.

The news is providing a stumbling block for the Social Networking Stocks Index, which is lower by 0.3%. LinkedIn shares have jumped 57% in the past month. With a $10 billion market capitalization, LinkedIn trades at 41 times 2010 revenue of $243 million and 618 times 2010 earnings of 17 cents a share, according to Barron’s.

Numbers like that add fuel to the valuation argument, especially when considering LinkedIn isn’t expected to be profitable this year. Even if the company earns the expected 32 cents a share in 2012, that would mean it currently trades at 328 times those earnings, Barron’s reported. The magazine advocated waiting to purchase LinkedIn shares until the company proves it can be profitable.

Looking at other Index members, Quepasa (QPSA) is off half a percent while Renren (RENN), China’s Facebook, is plunging 5%. SINA (SINA) is up 1% and United Online (UNTD) is higher by 2%.

Investors can track the Social Networking Stocks Index for performance trends and a suite of other metrics at tickerspy.com.

Tags: LNKD, QPSA, RENN, SINA, UNTD