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Big news in the business world today – Microsoft Corp. (MSFT - Free Report) and LinkedIn Corp. have entered into a definitive agreement under which Microsoft will acquire LinkedIn for $196 per share in an all-cash transaction valued at $26.2 billion, inclusive of LinkedIn’s net cash.
LinkedIn is the world’s largest and most valuable professional network. Over the past year, the company has launched a new version of its mobile app that has led to increased member engagement; enhanced the LinkedIn newsfeed; acquired a leading online learning platform called Lynda.com; and rolled out a new version of its Recruiter product to its enterprise customers.
“The LinkedIn team has grown a fantastic business centered on connecting the world’s professionals,” said Microsoft CEO Satya Nadella. “Together we can accelerate the growth of LinkedIn, as well as Microsoft Office 365 and Dynamics as we seek to empower every person and organization on the planet.”
“Just as we have changed the way the world connects to opportunity, this relationship with Microsoft, and the combination of their cloud and LinkedIn’s network, now gives us a chance to also change the way the world works,” CEO of LinkedIn Jeff Weiner said. “For the last 13 years, we’ve been uniquely positioned to connect professionals to make them more productive and successful, and I’m looking forward to leading our team through the next chapter of our story.”
LinkedIn stock had a great day of trading, increasing its value by 46.67%. The acquisition of the professional social media platform even affected Twitter stock , soaring up over 6% during midday trading and closing up 3.89%.
Social media was buzzing with commentary about the acquisition. Many investors believed that either Microsoft overpaid for LinkedIn or that LinkedIn was lucky to receive such a generous offer. (For more details on investor reaction, please read “Investors React As Microsoft Buys LinkedIn”).
Because this is one of the most notable acquisitions of 2016, let’s take a look at some graphs to help contextualize the company Microsoft purchased.
Monthly Users Relative to Other Social Media Platforms
LinkedIn may be the largest professional social media network; however, relative to other notable social media platforms such as Facebook , Twitter, and Instagram, LinkedIn active users pales in comparison. The professional networking platform has about 106 million monthly active users. By contrast, Facebook and WhatsApp each have over 1 billion monthly active users – Facebook has over 1.6 billion – Instagram has about 400 million monthly active users, and Snapchat and Twitter each have just over 300 million.
Number of LinkedIn Users in Each Country vs. Country Population
Not surprisingly, the United States has the most number of individuals with LinkedIn accounts with 128 million. Second is India with 35 million accounts and third, surprisingly, is Brazil with 25 million accounts. China comes in fourth with 20 million LinkedIn accounts. What is quite interesting with this data is the number of individuals with accounts in India and China relative to the populations of the countries. There is a large, untapped customer base in these economies that LinkedIn and Microsoft need to capitalize on.
2016 Q1 Revenue Distribution
Now, let’s get into the business side of things. LinkedIn in first quarter of fiscal 2016 had total revenue of $861 million, or a year-over-year increase of 35%. The Talent Solutions segment brought in $558 million, or 65% of the total revenue; the Market Solutions segment brought in $154 million, or 18% of the total revenue; and the Premium Subscriptions segment brought in $149 million, or 17% of the total revenue.
Since 2011, more often than not, LinkedIn has outperformed our Zacks Consensus Estimate. Despite a sharp decline in its stock price, LinkedIn has outperformed the past 4 earnings periods. From the company’s second quarter of fiscal 2015 to the first quarter of fiscal 2016, LinkedIn’s surprise percentages were 42.31%, 81.25%, 25¢ increase (estimate was $0.00 and the company reported a $0.25 EPS), and 64.29%.
LinkedIn took a huge hit on its market cap back in early 2016. This significant decline is the source of the criticism many investors had regarding Microsoft’s acquisition of the company – Microsoft simply paid too much money for LinkedIn. According to our most recent data, LinkedIn’s market cap was about 17.5 billion, and Microsoft paid us under $10 billion more for the company. Maybe Microsoft sees something the public doesn’t about LinkedIn. We will just have to wait and see.
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5 Informative Charts About LinkedIn (LNKD)
Big news in the business world today – Microsoft Corp. (MSFT - Free Report) and LinkedIn Corp. have entered into a definitive agreement under which Microsoft will acquire LinkedIn for $196 per share in an all-cash transaction valued at $26.2 billion, inclusive of LinkedIn’s net cash.
LinkedIn is the world’s largest and most valuable professional network. Over the past year, the company has launched a new version of its mobile app that has led to increased member engagement; enhanced the LinkedIn newsfeed; acquired a leading online learning platform called Lynda.com; and rolled out a new version of its Recruiter product to its enterprise customers.
“The LinkedIn team has grown a fantastic business centered on connecting the world’s professionals,” said Microsoft CEO Satya Nadella. “Together we can accelerate the growth of LinkedIn, as well as Microsoft Office 365 and Dynamics as we seek to empower every person and organization on the planet.”
“Just as we have changed the way the world connects to opportunity, this relationship with Microsoft, and the combination of their cloud and LinkedIn’s network, now gives us a chance to also change the way the world works,” CEO of LinkedIn Jeff Weiner said. “For the last 13 years, we’ve been uniquely positioned to connect professionals to make them more productive and successful, and I’m looking forward to leading our team through the next chapter of our story.”
LinkedIn stock had a great day of trading, increasing its value by 46.67%. The acquisition of the professional social media platform even affected Twitter stock , soaring up over 6% during midday trading and closing up 3.89%.
Social media was buzzing with commentary about the acquisition. Many investors believed that either Microsoft overpaid for LinkedIn or that LinkedIn was lucky to receive such a generous offer. (For more details on investor reaction, please read “Investors React As Microsoft Buys LinkedIn”).
Because this is one of the most notable acquisitions of 2016, let’s take a look at some graphs to help contextualize the company Microsoft purchased.
Monthly Users Relative to Other Social Media Platforms
LinkedIn may be the largest professional social media network; however, relative to other notable social media platforms such as Facebook , Twitter, and Instagram, LinkedIn active users pales in comparison. The professional networking platform has about 106 million monthly active users. By contrast, Facebook and WhatsApp each have over 1 billion monthly active users – Facebook has over 1.6 billion – Instagram has about 400 million monthly active users, and Snapchat and Twitter each have just over 300 million.
Number of LinkedIn Users in Each Country vs. Country Population
Not surprisingly, the United States has the most number of individuals with LinkedIn accounts with 128 million. Second is India with 35 million accounts and third, surprisingly, is Brazil with 25 million accounts. China comes in fourth with 20 million LinkedIn accounts. What is quite interesting with this data is the number of individuals with accounts in India and China relative to the populations of the countries. There is a large, untapped customer base in these economies that LinkedIn and Microsoft need to capitalize on.
2016 Q1 Revenue Distribution
Now, let’s get into the business side of things. LinkedIn in first quarter of fiscal 2016 had total revenue of $861 million, or a year-over-year increase of 35%. The Talent Solutions segment brought in $558 million, or 65% of the total revenue; the Market Solutions segment brought in $154 million, or 18% of the total revenue; and the Premium Subscriptions segment brought in $149 million, or 17% of the total revenue.
EPS Surprise
LINKEDIN CORP-A Price and EPS Surprise
LINKEDIN CORP-A Price and EPS Surprise | LINKEDIN CORP-A Quote
Since 2011, more often than not, LinkedIn has outperformed our Zacks Consensus Estimate. Despite a sharp decline in its stock price, LinkedIn has outperformed the past 4 earnings periods. From the company’s second quarter of fiscal 2015 to the first quarter of fiscal 2016, LinkedIn’s surprise percentages were 42.31%, 81.25%, 25¢ increase (estimate was $0.00 and the company reported a $0.25 EPS), and 64.29%.
Market Cap
LINKEDIN CORP-A Market Cap
LINKEDIN CORP-A Market Cap | LINKEDIN CORP-A Quote
LinkedIn took a huge hit on its market cap back in early 2016. This significant decline is the source of the criticism many investors had regarding Microsoft’s acquisition of the company – Microsoft simply paid too much money for LinkedIn. According to our most recent data, LinkedIn’s market cap was about 17.5 billion, and Microsoft paid us under $10 billion more for the company. Maybe Microsoft sees something the public doesn’t about LinkedIn. We will just have to wait and see.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>