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Many people have been largely skeptical of investing in stocks of social networks giants, especially since the embarrassed failure of Facebook (NASDAQ:FB) IPO in the market, which saw the company’s shares decline greatly and also shockingly.
While Facebook has over 850 million active users from everywhere in the world and a basically sustained huge flow of revenue from advertisement, the performance of the social network giant has left many in doubts about other competitions like LinkedIn (NYSE:LNKD)
LinkedIn, a more streamlined network is focused on working professionals across the world, and has maintained its own fair share of the market, especially as investors generally have a lot of confidence in the management of the company, with its strategic headway.
What concerns most investors is that for how long can they safely keep the stocks of these social network companies, especially remembering the fact that it would take more than the e-commerce application launch for Facebook to establish a bullish run in the market.
If I am to answer the question that this topic poses, I will rather say that there is still some bright future for these social stocks. Why?
Firstly, investors have repeatedly shown that they would always buy the shares of lucrative and popular products. And Facebook has a lot of that in stock – though social network platforms like Twitter is getting a big chunk of the Facebook market, the company still continues to rake in huge profits in advert revenue.
Also, LinkedIn with less stiff competition controls the markets of working professionals with its main revenue from selling premium membership to recruiters, companies, etc.
And if all these don’t seem to make sense to very pessimistic investors, the fact that a business can meander in various strategic directions is always a long term plus for its stock value. Just recently, Facebook is proving that by adopting a new e-commerce platform that would probably double its revenue stream in years to come. How it will be able to establish itself in the market is another question though.
LinkedIn, on the other hand will probably take away a large chunk of the market from Monster Worldwide (NYSE:MWW) and Dice Holdings (NYSE:DHX), and also become a number source for data for human resources consultants.
But If I am to pick the likeliest to dominate the market in the next few years, I would probably pick LinkedIn. The reason – Facebook, on one hand is suffering from loss of confidence from investors, especially in the ownership of the brand, which is probably why the company is the most analyzed (remember how much its recent IPO was talked about).
LinkedIn’s ability to stay largely “unnoticed” and yet churn out innovative products like its mobile app, would probably mean a lot for the company in the long term.
But who wants to completely write off Facebook?
