An Attempt to Justify LinkedIn's Valuation

An Attempt to Justify LinkedIn's Valuation

Can LinkedIn ever grow into its valuation? At 20.8 times sales, the stock is certainly expensive. In the video below, Fool contributor Daniel Sparks takes a look at LinkedIn's current growth trends and projects what its future earnings potential could look like in several years.

LinkedIn doubled its net margin and growing revenue by 72% in the last year, and Daniel believes that this young and fast-growing company could easily double its current revenue levels and net margin again in two years. By projecting two years out, Daniel is able to get a better look at the company's current valuation by adding a bit more perspective.

As it turns out, LinkedIn isn't terribly expensive after all.

If you want to learn more about what's driving LinkedIn's meteoric growth, you'll probably be interested in the Motley Fool's jaw-dropping investor alert video that takes a closer look at the company. Plus, you'll find out why The Motley Fool's chief technology officer is putting $117,238 of his own money on the table, and why he's so confident LinkedIn will be a huge winner in 2013 and beyond. Just click here to watch!

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Fool contributor Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends LinkedIn. The Motley Fool owns shares of 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.

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Originally published