Noteworthy
LinkedIn versus Facebook
LinkedIn announced today that it has reached 200 million members. It added an average of 6.5 million members a month in November and December 2012 and has doubled its membership since reaching 100 million members in March 2011. Meanwhile, Facebook back in October disclosed that it has passed the 1 billion users threshold.
On the surface it looks like Facebook dwarfs LinkedIn in number of users and more importantly in stock market capitalization. However, when you adjust for number of users, you realize that both companies trade at a much closer valuation per user. After rallying from under $19 a share in November to almost $30 this month, Facebook is currently trading at a near $63 billion market valuation if you use the widely used – but false – 2.17 billion share count on Yahoo Finance or $81 billion using our own calculated 2.8 billion share count. LinkedIn on the other hand trades at near $113 per share giving it a market capitalization of $12 billion.
| Market Cap ($Billion) | 12 | 63 or 81 |
| Users (Millions) | 200 | 1000 |
| MarketCap/User | $60 | $63-$81 |
So basically, investors are valuing a Facebook user at a minimum of $63 (we think its closer to $81) and a LinkedIn user at only $60. Do you think either is reasonable?
At the time of this post no staff member at the Wall Street Dispatch had any position in Facebook or LinkedIn.
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