Critical Comparison: LinkedIn Corp (NYSE:LNKD) and Twitter (TWTR)

LinkedIn Corp (NYSE: LNKD) and Twitter (NYSE:TWTR) are both technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, dividends, valuation, profitability and institutional ownership.

Insider & Institutional Ownership

64.0% of LinkedIn Corp shares are owned by institutional investors. Comparatively, 47.0% of Twitter shares are owned by institutional investors. 12.7% of LinkedIn Corp shares are owned by insiders. Comparatively, 10.8% of Twitter shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares LinkedIn Corp and Twitter’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
LinkedIn Corp N/A N/A N/A ($1.24) -158.03
Twitter $2.46 billion 4.72 $142.67 million ($0.63) -25.27

Twitter has higher revenue and earnings than LinkedIn Corp. LinkedIn Corp is trading at a lower price-to-earnings ratio than Twitter, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current recommendations for LinkedIn Corp and Twitter, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LinkedIn Corp 0 4 0 0 2.00
Twitter 14 20 5 0 1.77

LinkedIn Corp presently has a consensus price target of $204.00, indicating a potential upside of 4.10%. Twitter has a consensus price target of $15.44, indicating a potential downside of 3.01%. Given LinkedIn Corp’s stronger consensus rating and higher probable upside, analysts plainly believe LinkedIn Corp is more favorable than Twitter.

Risk & Volatility

LinkedIn Corp has a beta of 1.58, meaning that its stock price is 58% more volatile than the S&P 500. Comparatively, Twitter has a beta of 1.05, meaning that its stock price is 5% more volatile than the S&P 500.

Profitability

This table compares LinkedIn Corp and Twitter’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LinkedIn Corp 0.95% 0.72% 0.49%
Twitter -18.25% -2.91% -1.98%

Summary

LinkedIn Corp beats Twitter on 8 of the 11 factors compared between the two stocks.

LinkedIn Corp Company Profile

LinkedIn Corporation (LinkedIn) is a professional network on the Internet with approximately 400 million members in over 200 countries and territories. The Company provides the majority of its products at no cost to its members. It offers approximately three product lines: Talent Solutions, which includes Hiring, and Learning and Development; Marketing Solutions and Premium Subscriptions. Its products are sold through approximately two channels, an offline field sales organization, which engages with both large and small enterprise customers, as well as an online, self-serve channel, which includes enterprise customers and individual members purchasing subscriptions. Its solutions include Free Solutions and Monetized Solutions. Its Free Solutions include Stay Connected and Informed, and Advance My Career. The Company’s Monetized Solutions include Talent Solutions, which includes Hiring, and Learning and Development, Marketing Solutions and Premium Subscriptions.

Twitter Company Profile

Twitter, Inc. offers products and services for users, advertisers, developers and data partners. The Company’s products and services include Twitter, Periscope, Promoted Tweets, Promoted Accounts and Promoted Trends. Its Twitter is a platform for public self-expression and conversation in real time. Periscope broadcasts can also be viewed through Twitter and on desktop or mobile Web browser. Its Promoted Products enable its advertisers to promote their brands, products and services, amplify their visibility and reach, and extend the conversation around their advertising campaigns. Promoted Accounts appear in the same format and place as accounts suggested by its Who to Follow recommendation engine, or in some cases, in Tweets in a user’s timeline. Promoted Trends appear at the top of the list of trending topics for an entire day in a particular country or on a global basis. Its MoPub is a mobile-focused advertising exchange. Twitter Audience Platform is an advertising offering.

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