LinkedIn is slaying the Monster
Andrés is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Shares of Monster Worldwide (NYSE: MWW) rallied more than 17% on Thursday as the company reported earnings that were above analyst´s expectation. The online recruiter, however, is facing very tough competition from LinkedIn (NYSE: LNKD) which offers a better service on a bigger scale. It looks like LinkedIn has what it takes to inflict some serious damage to Monster; investors should avoid this stock regardless of the positive report.
Monster reported adjusted earnings of $0.40 per share, analysts were expecting $0.20 per share, and sales were also above estimates at $246.1 million versus $240 million expected by analysts. On the other hand, the company saw decreasing revenues for the quarter, sales were 6% less than in the same quarter of last year.
It’s not very common to see decreasing sales in an online company, at least not in successful ones; this is supposed to be a high growth area. LinkedIn, for example, is expanding revenues at more than a 100% annually. LinkedIn is not just a jobs board, it’s a social network specially designed for professional contacts and job searching and it has many advantages over Monster.
- LinkedIn is not only about job search: professional contacts, business ideas and interest groups are an important part of LinkedIn. Monster cannot compete in that area.
- LinkedIn promotes the profile of its users, while Monster hides their information unless recruiters are willing to pay for it. LinkedIn lists your profile in its public directory, which makes it easy for Google to index and list your profile in their search result. Monster locks in the information on your CV and sells it to recruiters.
- Uploading a CV at monster means the candidate is actively looking for a job, which could be an important drawback in case you are currently employed and want to keep your job search private. Joining LinkedIn, on the other hand, doesn´t imply you are necessarily looking for a job; most people do it for professional networking purposes.
- In this business the network effect is a very determinant factor. Recruiters and job searchers are moving to LinkedIn from Monster, and that creates a self sustaining competitive advantage. Recruiters want to use the site which gives them access to more candidates, and those looking for a job obviously prefer to be where the hiring companies are.
- Linkedin has a true global scale, while Monster still competes with many local job search websites in different countries. Job markets have little respect for international borders nowadays, and LinkedIn is better positioned in that sense.
LnkedIn offers a better service than Monster from multiple perspectives, and is already gaining market share from it. I wouldn´t buy Monster Worldwide unless there were reasons to believe that its competitive position versus LinkedIn is going to improve in the future. so far, I see no reason for that.
acardenal has no positions in the stocks mentioned above. The Motley Fool owns shares of LinkedIn. Motley Fool newsletter services recommend LinkedIn. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.