Linkedin Stock Forecast: LinkedIn’s $1.5 Billion Bet On Lynda.com Is A Long-Term Winner

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First

Linkedin Stock Forecast

  • Linkedin Stock ForecastLynda.com is a top-rated online training service provider.
  • Online training/digital education is a $105 billion/year industry. MarketsandMarkets predicts this could grow to a $454 billion industry by 2020.
  • Lynda.com’s killer advantage over the competition is that it offers learn-all-you-can online courses at a flat monthly rate.
  • Linkedin’s acquisition of Lynda.com helps it reduce the impact of ad-blocking.

Just like Facebook (FB) and Alphabet (GOOG), LinkedIn’s web-based business model is also under the dark cloud of ad-blocking. Linkedin’s desktop PC-heavy Sponsored Updates and Display Ads platform are vulnerable to more Linkedin members using ad-blocking browser extensions. There’s now 380 million people using LinkedIn.  Many of them are savvy professionals who know how to install Ad Block Plus or uBlock Origin.

The overpowering dominance of Facebook and Google over online display ads also hints Linkedin is unlikely to grow its advertising division. It was therefore only smart of Linkedin to buy online training firm Lynda.com last April. The $1.5 billion bet on Lynda.com fortifies LinkedIn’s premium subscription-heavy business model.

Lynda.com is actually LinkedIn’s biggest acquisition over its 12-year history. This bold bet is justified. In spite of the many competitors, Lynda.com remains a leader in providing affordable skills training to anyone in the world. As per the survey of ConsumerAffairs.com, customers rate Lynda.com higher than its closest rivals, Udemy, and Treehouse.

Linkedin is now empowering many of its 380 million users to improve their employment chances through Lynda.com. A Linkedin user could increase his chances of getting hired/promoted if he spends money for a 6-12 months of Lynda.com training.

Lynda.com’s Learn-All-You-Can Package Is A Long-Term Winner

The reason why Lynda.com still leads in online training is due to its learn-all-you-can subscription monthly package. Unlike the per-course fee structure of Udemy training, Lynda.com’s basic monthly $24.99 fee allows subscribers unlimited access to all courses.

Linkedin Stock Forecast

(Source: Lynda.com)

Individuals, companies, and government institutions could save a lot of money through Lynda.com’s on-demand and learn-all-you can monthly training deal. This Linkedin subsidiary touts a library of more than 4,100 video training courses covering skills needed by different professions.

Linkedin Stock Forecast

(Source: Lynda.com)

The long-term accretive contribution potential of Lynda.com to Linkedin is obvious. Lynda.com offers on-demand online training to corporations, which should complement Linkedin’s strong presence in the enterprise. Linkedin can sell negotiated on-demand training for companies who need to improve the skills of their rank and file employees.

Instead of just selling ad placements or Sponsored Updates to Fortune 1000 companies, Linkedin can now also sell Lynda.com multi-user training packages to corporations.

It is my firm believe that on-demand online video training is the future of educating the world’s global workforce. HR employees know all too well that having a workforce with up-to-date skill sets improves the competitiveness off their respective companies.

The Online Training Industry Is A Giant Growth Opportunity

Linkedin’s ownership of Lynda.com means it is now a leader in the multi-billion modern education industry. On-demand online courses is part of the $105 billion/year global digital education and training industry. MarketsandMarkets also predicts that the digital training/education business will grow to $446.85 by 2020.

I therefore opine that digital training, not the advertising industry, offers a better growth opportunity for Linkedin. Lynda.com’s affordable learn-all-you can training package will help it remain ahead of Udemy and Treehouse. Lynda.com has been profitable since 1997. Its 2014 net revenue was more than $150 million (Lynda has revenue-sharing deals with its trainers/contributors). This amount is already a third of Linkedin’s advertising revenue of $454.5 million last year.

Just Linkedin, Lynda.com’s paying clients are employees of government and private corporations. Linkedin could exploit its user base of 380 million members to help increase Lynda.com’s 4 million subscribers. Linkedin could also help Lynda.com recruit more trainers to improve its new 60 courses/week rate of increasing it video training library.

Linkedin Stock Forecast

(Source: Lynda.com)

Even students and unemployed individuals in emerging markets like the Philippines can afford the $24.99 month-to-month fee of Lynda.com training. While North America is currently the biggest market for digital education, Asia Pacific countries will experience a surge in adopting online education. People Asian countries are getting access to faster and cheaper internet connections.

Conclusion

Linkedin’s stock has not yet recovered from its February-March price range so I think it still has more upside opportunity. Investors who can appreciate the long-term potential of Lynda.com should add Linkedin to their portfolios. Going forward, I expect Lynda.com to contribute more recurring revenue once Linkedin gets more enterprise customers pay for on-demand video training.

Linkedin Stock Forecast

(Source: EquitiesLab.com)

I Know First wrote a Seeking Alpha Article about LinkedIn on July 1st 2015. The article argued that the company’s stock was bullish in the long term because of the numerous opportunities for expanding their international market. Since that time, the stock price has increased  22.88%.

On August 26th I Know First Forecasted the performance of LinkedIn in a bullish direction for the next three months with a signal of 41.97 and a high predictability of 0.29 by november 26th the stock had gone up and gave a return of  44.56%.Linkedin Stock Forecast

My long-term buy recommendation for Linkedin is also supported by I Know First’s positive algorithmic one-year forecast for LNKD. The green, positive 3.31 score for LNKD hints that market trends will likely help this stock have a higher (not lower) price after a one-year period.

Linkedin Stock Forecast

The positive algorithmic forecast of I Know First for LNKD is also accurately in line with other long-term technical indicators, which are also endorsing a Strong Buy rating for Linkedin.

Linkedin Stock Forecast