LinkedIn shares sink as Facebook threat looms
SAN FRANCISCO (AP) — LinkedIn Corp.'s stock dropped Monday as investors fretted about a potential battle between the online professional networking service and the far larger Facebook Inc.
THE SPARK: After the markets closed last week, The Wall Street Journal reported that Facebook is working on a jobs-listing service that could undercut LinkedIn's position as an Internet hub for managing careers and finding talented employees.
Facebook is working on its jobs board with three other companies — BranchOut, Jobvite and Work4 Labs — that already offer help-wanted applications that tap into Facebook's social network, according to the Journal, which cited unnamed people familiar with the matter. The partnership would unify the job listings to make them easier for Facebook's 900 million users to search.
The Facebook-backed jobs board could debut as early as next month.
THE BIG PICTURE: A competing service from Facebook could slow LinkedIn's growth by providing employers with another channel for recruiting talent. LinkedIn gets more than two-thirds of its revenue from fees it charges companies, recruiters and job seekers who want broader access to the profiles and other data on the company's website. Through March, LinkedIn boasted more than 160 million users who had posted their resumes on the site.
LinkedIn's increasingly influential role in the help-wanted market has helped more than double the company's stock price since its initial public offering at $45 in May 2011. The IPO turned LinkedIn co-founder and Executive Chairman Reid Hoffman into a billionaire. Hoffman also was an early investor in Facebook and still owns 3.8 million shares in the social network, which are worth about $120 million.
THE ANALYSIS: Although he expects Facebook and LinkedIn to increasingly tread on each other's turf as the lines between social and professional networking to blur, J.P. Morgan analyst Doug Anmuth still expects both companies to thrive.
"Despite the importance of the social layer in the job search process, we believe many users will want to keep their social and professional profiles somewhat separate online," Anmuth wrote in a research note.
SHARE ACTION: LinkedIn's stock shed $5.86, or 5.4 percent, falling to $103 late Monday.