LinkedIn Corp (NYSE: LNKD) and Renren (NYSE:RENN) are both technology companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, valuation, profitability, risk, dividends, earnings and institutional ownership.
Risk and Volatility
LinkedIn Corp has a beta of 1.58, suggesting that its stock price is 58% more volatile than the S&P 500. Comparatively, Renren has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500.
This table compares LinkedIn Corp and Renren’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a summary of current ratings and price targets for LinkedIn Corp and Renren, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
LinkedIn Corp presently has a consensus target price of $208.00, indicating a potential upside of 6.14%. Given LinkedIn Corp’s higher possible upside, analysts plainly believe LinkedIn Corp is more favorable than Renren.
Earnings and Valuation
This table compares LinkedIn Corp and Renren’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Renren||$73.53 million||7.22||-$70.01 million||($2.21)||-3.51|
LinkedIn Corp has higher revenue, but lower earnings than Renren. LinkedIn Corp is trading at a lower price-to-earnings ratio than Renren, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
64.0% of LinkedIn Corp shares are owned by institutional investors. Comparatively, 2.6% of Renren shares are owned by institutional investors. 12.7% of LinkedIn Corp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
LinkedIn Corp beats Renren on 8 of the 9 factors compared between the two stocks.
About LinkedIn Corp
LinkedIn Corporation (LinkedIn) is a professional network on the Internet with approximately 400 million members in over 200 countries and territories. The Company provides the majority of its products at no cost to its members. It offers approximately three product lines: Talent Solutions, which includes Hiring, and Learning and Development; Marketing Solutions and Premium Subscriptions. Its products are sold through approximately two channels, an offline field sales organization, which engages with both large and small enterprise customers, as well as an online, self-serve channel, which includes enterprise customers and individual members purchasing subscriptions. Its solutions include Free Solutions and Monetized Solutions. Its Free Solutions include Stay Connected and Informed, and Advance My Career. The Company’s Monetized Solutions include Talent Solutions, which includes Hiring, and Learning and Development, Marketing Solutions and Premium Subscriptions.
Renren Inc. operates a real name social networking Internet platform in China. The Company enables users to connect and communicate with each other, share photos, and various features and services. The Company is developing Internet finance business to leverage its social networking services and user base in China, particularly focusing on the audience of college students and young people in China. The Company operates through two segments: Renren and Internet finance. The Company’s Renren segment focuses on online advertising and Internet value-added services (IVAS). The Company’s Internet finance segment includes Renren Fenqi, an online platform, which provides credit financing to college students in China through the form of payment by installments; its used automobile financing business, which provides credit financing to used automobile dealers, and Renren Licai, a financing and lending platform.
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