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Professional Diversity Network (NASDAQ:IPDN) presents a very straightforward and timely short opportunity. IPDN operates essentially two minority-oriented, job recruiting sites. On December 31, 2012, the Company lost its largest customer, Monster Worldwide (NYSE:MWW). Not only have IPDN's site visits been rapidly declining, but Monster had no logical need to partner with IPDN, given Monster's strong position in the space (it now just lists those jobs on its own site). Monster accounted for 65% of IPDN's 2012 revenue, nearly all its listings and likely all of its earnings. IPDN went public on March 4, 2013 as an "emerging growth company" under the reduced disclosure standards of the JOBS Act. This is a company that would not have met SEC nor NASDAQ standards prior to this Act. Apparently those that participated in the IPO did not make it far enough into the S-1 to notice that recruiting revenue would be declining so substantially and how bleak the company's prospects have become.

In attempt to fill the revenue hole that was created, the Company signed a deal with LinkedIn (NYSE:LNKD) effective December 31, 2012 under much less favorable terms (only $2M in annual fee revenue to post job listing on IPDN's sites versus $4M from Monster). Q1 earnings were released yesterday. Not surprisingly, Y/Y revenue was essentially cut in half with earnings turning sharply negative (-$0.5M, -$0.11 per share). IPDN reported 2.3M members, but the active members number is likely substantially lower and is also shrinking. Unique visits data in the latest 10Q is no longer presented in a table for comparative purposes, but is listed in the text of the MD&A. It is understandable why as unique visitors have sequentially declined 40% and 30% for its primary two sites iHispano.com and AMightyRiver.com, respectively. The rate of viewership decline is accelerating. In the last three months ended 5/15, pageviews on its largest site iHispano are each down over 70% (see the Alexa.com traffic numbers for iHispano.com and AMightyRiver.com).

Since losing Monster, IPDN is now seeking to build a sales force from scratch to sell its recruitment services to potential customers (outside the 1,000 companies restricted by the LinkedIn agreement). The Company's sites are becoming less relevant by the day, and it doesn't possess any unique qualities or strategies. This transition will be costly and only add to existing losses. In an industry that is dominated by much larger players like Career Builder, Monster and increasingly, social media outlets, IPDN's competitive position will only become more tenuous. It is unlikely the Company will ever return to profitability. The attractive Monster contract which kept them alive before is gone. It will now be next to impossible for them to compete in an industry where peers have vastly larger resources and market awareness. Near-term catalysts include: 1) awareness of these weaknesses and 2) lock-up expiration of 56% of its shares on August 14.

Source: Professional Diversity Network: Time To Find A New Career