LinkedIn Stock Is A Better Social Media Play Than Twitter Right Now

  • Twitter's unique selling point is up for debate as user growth stalls.
  • LinkedIn has been successful at monetization despite its relatively small userbase.
  • There is nothing quite like Lynda in the social media industry, and after acquiring Lynda, they are well-placed to enter the lucrative education and certification industry.

As competition in the social media industry ramps up, Twitter (NYSE:TWTR) is finding that their unique selling point of enabling users to reach a large audience quickly has come under huge competition from heavyweights such as Whatsapp and Snapchat. Peculiarly, they have failed to pivot quickly in order to have a compelling unique selling point.

On the other hand, LinkedIn (NYSE:LNKD) is thriving in the competitive world of social media. This is due to three major factors.

1) LinkedIn is geared at professionals and entrepreneurs. As a result, their users are worth more to advertisers. Consequently, they are able to charge more for their ad inventory.

2) As Facebook continues to grow as a giant in the social media market, there has been a trend towards specialization in order to survive. For instance, Instagram is an image-centric social media network, Periscope is becoming a force with regard to live video broadcasts, and LinkedIn is focused on connecting professionals with job and networking opportunities.

3) LinkedIn has returned a profit for five consecutive years (2009-2013). Therefore, they have been able to  prove to investors that they are building a profitable social media network for the future. On the other hand, Twitter has so far failed to show significant profit, and has instead shown a propensity towards making significant losses.

User Acquisition, Retention And Monetization

As we have seen with fallen social media companies of the past, a failure to acquire more users, create a unique experience, and monetization issues has been integral to their downfall. To put this into context, back in 2007, Myspace was valuated at $12 billion, and it would have taken a crazy analyst to predict that it will sell for just $35 million, just 4 years later.

It is with regard to the factors above that LinkedIn excels over Twitter.

For instance, Twitter's user growth problems are well-documented. This could have been forgiven, but when investors consider the fact that Twitter has such a huge brand image, and high expectations, they are being punished on the stock market.

On the other hand, LinkedIn has shown that although they have fewer users (approximately 1/3rd of Twitter's), they enjoy higher revenue figures, and a higher valuation. To quantify Twitter's regression and LinkedIn's growth and stability, soon after Twitter's IPO, it was worth 80% more than LinkedIn. Fast forward to now and Twitter's stock worth is approximately 55% less than LinkedIn stock.
TWTR stock chart

Twitter stock price comparison with LinkedIn stock by amigobulls.com

Conclusion

In conclusion, LinkedIn continues to make forward-thinking investments such as Lynda. This will allow them to enhance the user experience, and add significant revenue to their bottom-line. Lynda opens the door for LinkedIn to provide 'bite-sized' courses which users can use to scale up the career ladder.

Although LinkedIn has significantly fewer users than Twitter, each user is worth more, judging by their significantly higher revenue figures.

Moreover, I am going to stick my neck on the line and state that Twitter will go the way of Myspace over the next five years. The crucial 18-24 demographic are opting for Instagram and Snapchat. Moreover, middle-aged consumers are happy to create private Facebook and Whatsapp groups. With the uncertainty surrounding the usefulness of Twitter, they need to redefine their product and fast.

Finally, LinkedIn continues to push ahead with their networking and job opportunities approach to social media. And with their acquisition of Lynda, they are able to enter the lucrative education industry.

All things considered, LinkedIn stock is well-placed to grow, while it won't be far-fetched to state that we are seeing the beginning of Twitter's downfall.

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Author's Disclosures & Disclaimers:
  • I do not hold any positions in the stocks mentioned in this post and don't intend to initiate a position in the next 72 hours
  • I am not an investment advisor, and my opinion should not be treated as investment advice.
  • I am not being compensated for this post (except possibly by Amigobulls).
  • I do not have any business relationship with the companies mentioned in this post.
Amigobulls Disclosures & Disclaimers:

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