I’ve always said LinkedIn stock was way overpriced and the actual value of the company was probably half of what it was. And helping prove my point, LinkedIn shares plunged 42% today, shaving $10 billion off the company’s valuation. Ouch.
I can imagine there are a lot of unhappy shareholders. Ironic that investor and shareholder pressure help cause LinkedIn to make a sequence of ill-conceived mistakes that took the company further and further away from where they were making money.
LinkedIn started out as a recruitment site. They should have stopped there because that’s where they still make most of their money. But early on investors were unhappy with the “low” monthly visitor rate, and time between visits. Well, that’s what you would expect from a recruitment site and LinkedIn was making lots money from recruiting.
To appease investors they came up with a half-baked idea that they could be a social network, and that would pump up the number and regularity of site visits. A little while passes and they realize they’re a third-rate social network, and people still didn’t come to the site that often. But, hey, they were still making a lot of money from recruitment.
Guess what? Instead of acknowledging their failure as a social network, they came up with another half-baked idea. We’ll become a content site! That way people will come to the site more regularly to get news and other content.
So, they plunked down nearly $100 million for Pulse. What idiots! They aren’t a content company and will never be one. The content biz on the web is brutal.
And where do they still make most of their money? You got it, recruitment.
Linked in made a series of misdirected efforts that were intended to pump up site visits, retention, and frequency. All that did was drain away tons of money and resources that should have been spent strengthening LinkedIn’s real business, which is recruitment. They should have bought Dice, not Pulse.
Hey, Linkedin! Stop trying to be something you’re not! Get back to your core business and stop chasing markets that have little to do with recruitment.