LinkedIn Wants Your Business—and Investors Are Bullish

Moneybox
A blog about business and economics.
Aug. 1 2014 12:21 PM

LinkedIn Stock Soars on Promise of New Sales Product

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Things are looking good for Jeff Weiner.

Photo by Stephen Lam/Getty Images

LinkedIn's stock is surging this morning after its second-quarter earnings pleasantly surprised investors. Growth accelerated unexpectedly and profit (minus some large expenses) far exceeded the targets analysts had set. To top it off, LinkedIn raised its full-year outlook by $75 million. Shares of LinkedIn, which had slipped in the hours leading up to its earnings announcement, leaped roughly 10 percent overnight.

LinkedIn has also introduced a "Sales Navigator" that will help connect salespeople with buyers. "Our research shows that social selling transforms the sales process," CEO Jeff Weiner said on the earnings call. "Buyers are over five times more likely to engage with sales professionals when introduced through a common connection versus a cold call."

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If Sales Navigator takes off, it could help LinkedIn attract a new segment of consumers and expand its revenue base. As things stand, LinkedIn relies heavily on its human resources business, Talent Solutions, to make money. This past quarter, Talent Solutions accounted for 60 percent of LinkedIn's total revenue, with its marketing operations and premium subscriptions evenly splitting the other 40 percent. A common worry among investors in the past has been that LinkedIn's membership and market for business professionals is pretty much tapped out.

Sales Navigator is a push into new territory with potential widespread appeal. After all, what business doesn't have some form of sales team? At the moment Sales Navigator costs $1,200 a year—which sounds daunting, especially since there's not much data available on its effectiveness. But if LinkedIn's promises can hew to reality, it might be a price a lot of businesses are willing to pay.

Alison Griswold is a Slate staff writer covering business and economics.

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