LinkedIn to Improve User Engagement with Newsle Acquisition

Shares of LinkedIn LNKD jumped 2% on Monday's trade after the company reportedly bought Newsle, a San Francisco-based technology start-up founded in 2011. The financial terms of the deal were not available. Reports suggest that Newsle will continue to function as a separate entity but its features will be merged with LinkedIn.

Newsle offers its more than 2 million users relevant news feeds/articles on people they follow on social and professional networking sites in real time. With the acquisition, LinkedIn will gain access to this software which searches relevant information on the Internet faster, in turn, increasing user engagement.

Separately, LinkedIn has taken several initiatives to increase its user engagement like the launch of a low-base subscription service called Premium Spotlight. Apart from this, LinkedIn has redesigned its member profile pages with larger profile photos and header images. Moreover, the professional networking company has launched a job search app for Apple's AAPL iPhone to cater to the growing number of its members who search for jobs via mobile devices.

These initiatives will boost LinkedIn's chances of increasing its paid-membership count. The company's expansionary initiatives in China also remain on track, which give it a head start on Facebook FB and Twitter TWTR.

Nonetheless, continued investments to improve product and service offerings might affect LinkedIn's profitability. Though impacting the company's operational performance in the short run, these investments drive member growth and user engagement over the long term. We remain encouraged by the 45-50% top-line growth recorded in the past few quarters.

LinkedIn, thus, remains a pioneer and a leading professional networking company with a wide industry reach that enables it to explore and tap into every opportunity to connect the global workforce.

Currently, LinkedIn has a Zacks Rank #2 (Buy).