CASE STUDY: LINKEDIN CORPORATION
The purpose of this case study is to analyze and forecast LinkedIn’s enterprise value based on market multiples. The primary multiple used for this valuation is EV to EBITDA and Revenue. Other multiples selected are market capitalization by net income. IPO OFFERING
LinkedIn seed capital came from a combination of financing channels, Series A Preferred Stock and Series B venture capitalist firms and investors. Beneficial ownership and voting privileges are divided by the class of shares, Class A and Class B. However, having more than one class of stocks allows for shareholders to hold more than one vote depending on their charter. When an enterprise has more than one class of common stock, investors have the option to choose whether they want control of voting decisions or receive more earnings. COMPETITION
As of current the competition from professional social networking is increasing. LinkedIn is forecasting an increase in website visitor traffic but they must be cognoscente of new or existing competition that is contending for their position in the marketplace. An analysis of their competitors is mapped in (Exhibit 1); each competitor poses a threat to the enterprise. As market trends have demonstrated often times new pioneering enterprises at the start flourish but momentum and customers tend to taper off when the excitement of a new product wanes. Declining notoriety negatively shifts revenue flows and customer alliances, allowing competition to potentially overtake leading position and capturing LinkedIn customers. Although, competitive rivalry is good, managing competitive advantages and disadvantages requires strategy by acquiring talented expertise to sustain and grow the business. Additionally, these factors can negatively affect valuation causing correction; this reverse movement of valuation can be at least 10% in stock price change. The potential fluctuation of price decline typically is a temporary interruption...
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