The professionally themed social networking platform has come a long, long way. From a largely unknown brand at its foundation in December 2002, the service has grown into a colossus of sorts. After attaining the one-million subscribers’ milestone in two years, and the ten-million subscribers’ milestone in five years, the platform now boasts of over 630 million subscribers in 200 countries. It also boasts of 15,000 employees in its 33 global offices, including its headquarters in Sunnyvale, California. These and other commendable growth indices are the reasons many have been asking questions about LinkedIn’s net worth. Learn how much LinkedIn is worth and how the platform makes money for its owners.
LinkedIn’s Intriguing Beginnings Before Success
Microsoft acquired LinkedIn at a cost of $26.2 billion in December 2016. At this cost, Microsoft was paying a whopping $196 per LinkedIn share which, in turn, represented a 50% premium over LinkedIn’s last closing price on the floor of NYSE. As widely reported, this is also Microsoft’s biggest buy ever.
The social network which was initially conceived in co-founder Reid Hoffman’s living room in 2002 was officially launched on May 5th, 2003. The site’s initial growth rate was slow, starting with a modest 20 sign-ups. After opening up its first revenue-making operations – job listings and subscriptions – in 2005, LinkedIn began to turn in profit and by 2011, the company became a publicly listed company on the New York Stock Exchange.
Learn More About LinkedIn’s Worth
When the Microsoft acquisition deal was announced, the perception among many analysts, including Forbes’ contributor Peter Cohan, was that the investment was ill-considered and a waste of money. One of the reasons commonly adduced for this point of view is that the professional social media sector had lost considerable market share over the last fiscal year, leading to investors withdrawing 44% of their funds from LinkedIn’s market capitalization only months before the acquisition took place.
However, just after two full quarters under the administrative roof of Microsoft, LinkedIn moved from being Microsoft’s most expensive deal ever to one of its fastest-growing businesses. It pulled in a $976 million revenue in its first full quarter after the acquisition and $1.3 billion in the second quarter. This drew the positive attention of investors back to LinkedIn and the corporate social media sector at large. This has therefore increased the worth of LinkedIn to investors. As a result, though the company’s stock remains stable at $195.98 at press time, there are indications that the overall perceived value of the company itself has received a great boost.
One obvious reason the worth of the company was bound to receive a face lift after the acquisition deal was Microsoft’s perceived Midas touch. Investors were expected to bank on Microsoft’s profile as a well-grounded company. It was also expected that Microsoft had all it would take – in terms of the fund, manpower, and infrastructure, among others – to steer LinkedIn out of the doldrums and into profitability. But what exactly is LinkedIn’s net worth? While we do not have the precise figures to show to this effect, let us try a different approach to enable you to assess the health of LinkedIn and make assumptions about its future: let’s see how LinkedIn makes money for its owners.
How Does The Social Media Site Make Their Money?
While Facebook continues to maintain its spot as the largest social networking site in the world, it is also a fact that LinkedIn has supported its users for a much longer time. Due to its longevity, LinkedIn has acquired an impressive net worth over the years. Its search volume as a “professional social networking site” has more than doubled in recent years as well. Unlike other social media platforms, which generate much of their income from adverts, LinkedIn’s services are something for which users are willing to pay.
According to LinkedIn’s latest 10-k Report to the US Security and Exchange Commission (SEC), the company generates revenue via recruitment services, advertising/for-pay research services, premium subscription, and learning services:
With over 630 million users and over 15,000 employees worldwide, more than a fair share of LinkedIn’s worth and yearly earnings were accrued from their recruitment services dubbed Talent Solutions. They help companies attract, recruit and possibly hire quality workforce through a monetized system. This comes in two parts: Hiring, and Learning and Development (L&D).
Advertising And For-pay B2B Research Services
LinkedIn is particularly noted for its suitability for B2B (Business-to-Business) marketing. So, it leverages on that to sell suitable advertising to the professionals in its network. At the onset, the platform served Google ads. But in 2008, it launched its own LinkedIn DirectAds. Their sponsored updates – a content ad platform – was launched five years later. Similar to advertising, LinkedIn’s over-600-million strong subscriber base also provides an awesome opportunity for B2B market research by marketing professionals and unsurprisingly, LinkedIn has monetized that too.
Considering its worldwide popularity, it is not surprising that LinkedIn has leveraged that towards premium subscriptions, garnering a higher net worth in the process.
The basic membership level on LinkedIn is completely free of charge. However, the platform also provides opportunities for members to pay for more enhanced levels of user experiences. Some of these advanced services offered towards a better user experience include the ability to send inbox messages and/or contact people outside the circle of members’ professional networks. According to available reports, about 39% of LinkedIn users pay for LinkedIn Premium. This service has four price tiers which include:
- Premium Career: $29.99/month
- Premium Business: $59.99/month
- Sales Navigator Pro: $79.99/month
- Recruiter Lite (Hiring): $119.95/month
See Also: How Much Is Facebook Worth in 2019 And How Do They Make Their Money?
LinkedIn is further maximizing its niche by offering an opportunity for professionals to undergo courses on their platform. Dubbed Learning and Development (L&D), these courses are aimed at increasing the market value of professionals through the acquisition of new skills and awareness. Although this is not generally considered a major source of revenue for LinkedIn, nor has it majorly influenced LinkedIn’s net worth, it has gradually and increasingly garnered market share over the years. This increase can be attributed to the fact that professionals who go above and beyond to acquire new skills and awareness are typically favored by employers.