LinkedIn Adds University Pages, But Is This Enough For The Long-term?

| About: LinkedIn (LNKD)

LinkedIn (NYSE:LNKD) has been the most successful networking company since going public, if comparisons were to be made against Facebook (NASDAQ:FB) and Zynga (NASDAQ:ZNGA), which participate in the social networking and social gaming respectively. The professional networking giant has been rallying year-after-year, showing no signs of slowing down as it continues to post improved profits and revenues.

However, there is probably one question that LinkedIn investors would want answered as far as long-term future is concerned. The company's addressable market stands at a paltry 600 million, compared to Facebook's 4 billion plus in possible subscribers. If investments were based on nothing more than outlook, then Facebook would have probably scored better than LinkedIn over the last one year or so.

Nonetheless, that hasn't been the case, mainly because, LinkedIn, has been the better performer in terms of revenue and earnings growth. Additionally, LinkedIn has continued to blow analyst estimates from one quarter to another.

Currently, LinkedIn's subscriber base of more than 230 million professionals suggests that at least 40% of the market is already utilized, thereby leaving about 60%. However, the balance could have been even higher if LinkedIn offered more products to address other types of workers, as its 600 million market is composed of knowledgeable workers.

The global workforce stands at about 3.3 billion, according to research, which means LinkedIn products, which include talent solutions, marketing solutions and subscriptions, account for about 18% of the global workforce.

LinkedIn Launches University Pages

However, the company seems to be fully aware of that following its recent introduction of University Pages, a product which aims to connect High School students with potential Universities which they could join upon graduating from High School.

This product would be very pivotal in addressing a certain age group that the company had completely left out, and which Facebook has been able to incorporate on its social platform. However, the biggest question, just as has been the case of Facebook with regard to this age group, is monetization.

The company says that it has already added 200 schools and will be adding thousands more in the near future. There is no doubt that it will be growing its subscriber base massively following the launch of this product, but it is hard to say that monetization would be in tandem with growth.

LinkedIn also hopes to link the alumni of various universities and colleges to students to enable them make their choices well in choosing which programs to study and at which institution. Additionally, there is the possibility of recruiting graduates direct from college via the University Pages.

However, considering the fact that a majority of the graduating students easily fall under the knowledge class of professionals, this could imply that LinkedIn is expanding its user-base from the same addressable market, only that a majority of them would be joining the network earlier than before.

So what then?

I believe that LinkedIn will have to introduce other products that focus on the non-knowledge workers, a field that is dominated by several small startups. If a giant like LinkedIn were to enter the market, then there is no doubt that it will take up a majority of the market. This will also ensure that going forward, there is a huge lake to fish, thereby improving on the long-term outlook.

The non-knowledge workforce will provide LinkedIn with the opportunity to increase revenue per user much better than would the high school students joining campus. The challenge, though, will be the way in which the professional networking giant animates the process, since its current talent solution, which caters for about 54% of total revenue, relies on the partnership between LinkedIn and employers.

Most employers of the non-knowledge workforce might find it difficult to facilitate such partnerships.

The bottom line

The risk versus reward trade-off seems to lean towards the positive side on introducing products for the non-knowledge workforce. This is because, with the current technological developments, even small businesses are adapting, which means in the near future, their recruitment processes may as well use platforms such as talent solutions.

On the other hand, the University Pages would be well monetized if linked with possible employers, while the link between high school and university may have to be tied to the marketing solution for ad-based revenues.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.