Stock investment – LinkedIn Looks to Students and Recruiters to Reignite Growth — The Motley Fool



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To say it hasn’t been a fun three months for LinkedIn investors is an understatement. On its fourth-quarter earnings call, management issued a disappointing forecast of revenue growth between 20% and 22% for 2016. For shareholders who just witnessed 35% year-over-year revenue growth in 2015 and 65% annualized growth over the past five years, the low guidance was an unwelcome surprise. The share price reacted accordingly by dropping 44% in a single day. 

Last week, LinkedIn (NYSE: LNKD) announced LinkedIn Students, an iOS and Android app aimed at helping soon-to-be college graduates find a job. The next day, LinkedIn overhauled Recruiter which is a part of Talent Solutions, the company’s largest revenue generator. 

Now, LinkedIn shareholders are hoping the company’s latest initiatives will jump-start growth at the world’s largest professional network.

LinkedIn Students
According to the National Center for Educational Statistics, colleges and universities are expected to grant over 2.7 million associate and bachelor degrees this year. With summer graduation fast approaching, LinkedIn is looking to capitalize on these new candidates with its new LinkedIn Students app.


Image Source: LinkedIn.

Upon logging into the app, students are greeted with a message to view five new ideas that will assist them with their job search. A swipe right will feature a recommended job with a median salary and brief job description. Swiping again will feature a link to an article related to the candidate’s job search, the interviewing process, or other career-related articles relevant to college graduates. Further swipes lead to recommendations on companies to follow, the careers of fellow alumni, and another job title the candidate may be interested in. Students can “favorite” any of the recommendations from LinkedIn, and doing so would allow LinkedIn to provide more relevant recommendations going forward. 

This is not LinkedIn’s first foray into capturing the younger demographic. In 2013, LinkedIn introduced University pages, helping high school graduates explore different universities and engage with current students and alumni. Unfortunately for LinkedIn, the portal didn’t land with users. LinkedIn University will be discontinued on May 16.

By transitioning its focus on new college graduates, LinkedIn is looking to solve multiple issues with its platform. According to comScore, despite reaching over 50% penetration of the 18- to 34-year-old market, LinkedIn users engage with the site less often than many of its social-media counterparts.

Source: comScore.

Of LinkedIn’s total user base, only 15.5% is in the 18- to 24-year-old demographic, lower than any of the other popular social-media sites.

Source: comScore.

Increasing engagement with the millennial generation is critical to LinkedIn’s success. The lifetime value of this demographic is larger than it would be for older demographics, as millennials have long careers ahead of them and tend to job-hop more than older generations. By highlighting relevant content and jobs in a dedicated mobile app, LinkedIn is hoping to increase penetration and engagement among younger users.

Recruiter
On Tuesday, LinkedIn refreshed its flagship Talent Solutions product for the first time in seven years. LinkedIn Recruiter provides recruiters the ability to search, view, and communicate with potential candidates, collaborate with their colleagues, and manage their talent pipeline. With Talent Solutions consisting of 63% of LinkedIn’s total revenue, it’s important that the refresh adds value to its users.

Aside from a spruced-up interface, the Recruiter platform seeks to make hiring recruiters more productive with dynamic search suggestions and profile matching. With dynamic search results, the company is adding a search feature that will use algorithms to introduce search features suggesting different skills, locations, jobs, and categories to better help recruiters find whom they’re looking for. For example, a recruiter may type in that he or she is looking for an architect in Seattle who focuses on “big data.” Recruiter’s search feature will suggest the skills that are trending for big-data architects. It will also let the recruiter know what companies, industries, and schools to look at.

Another updated feature is profile matching, which allows recruiters to search for candidates similar to high-performing employees who may already be on the team. Rather than searching the skillset of those high performers, recruiters can type in the name of that person. LinkedIn will use algorithms to come back with recommendations on candidates who are similar to the company’s current rock-star employee.

One of the keys to finding a great long-term investment is by analyzing management and reviewing if they say what they do and do what they say. When highlighting LinkedIn’s 2016 priority in terms of its core hiring products, CEO Jeff Weiner stated:

In 2016, we have three priorities for our core hiring products. First, we will roll out new Recruiter and Referrals across our existing customer base. Second, we will tie our existing products together into an easy-to-use suite — growing our potential to impact greater amounts of hiring with existing customers. And third, we will begin our journey toward addressing long-tail hiring by making Recruiter simpler to use, and introducing automated sourcing to help SMBs and hiring managers find and acquire talent.

He went on in expressing the company’s strategy for this year:

“Our strategy in 2016 will increasingly focus on a narrower set of high value, high-impact initiatives with the goal of strengthening and driving leverage across our entire portfolio of businesses. Our roadmap will be supported by greater emphasis on simplicity, prioritization, and ultimate ROI and investment impact.”

In the first quarter of 2016, LinkedIn has taken steps to align its actions with management’s words. By focusing its energy on increasing its user base and engagement with a new generation along with improving its core product, the company has taken the first steps in adding value to its users. The next step will be to get back to adding value for shareholders.

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