The share prices of LinkedIn are doing very well post-IPO, closing at a record high of US$168.55 on 27 February, according to a report by the Wall Street Journal. This is in sharp contrast to the performances of Zynga, Facebook and Groupon.
One of the key reasons for its stellar performance is that LinkedIn has become a major source of talent for Fortune 500 companies.
Chris Hoyt, who helps manage Pepsi’s human resources department, explained that the beverage firm has increased its spending on LinkedIn in the past three years, paying for career pages, job ads and a recruiter talent finder.
“There’s one tool consistently used across the board and that’s LinkedIn,” said Hoyt. However, he did not reveal an exact figure for Pepsi’s spending on the social network.
Nevertheless, Hoyt explained that Pepsi’s payment to LinkedIn is based on an annual contract wherein the beverage maker can raise its payment if it requires special recruiting initiatives.
Pepsi’s willingness to boost its spending on LinkedIn may help explain why the company is now worth US$18 billion, a quantum leap from the US$4 billion when it first went public in May 2011. Comparatively, the market capitalisations of Zynga, Facebook and Groupon have all fallen by 25 per cent to over 60 per cent since their market debuts.
LinkedIn was long considered social media’s ugly duckling, with investors baffled by its hybrid business model wherein the focus is on the less popular world of professional connections. LinkedIn focuses on attracting users but it sells its services mainly to businesses.