LinkedIn Launches Premium Spotlight - Analyst Blog

Reportedly, LinkedIn LNKD has launched a subscription service called Premium Spotlight for around $10 per month. This is significantly lower than the usual subscription charged by the company for its premium services. Premium Spotlight is a strategic plan to get free members to try out premium services.

It is worth noting that LinkedIn derives 20% of its total revenue from Premium Subscriptions, revenue contribution from which jumped 45.6% year over year in the last-reported quarter (first-quarter 2014). Higher adoption of the new low-cost plan will enable the company to generate incremental revenues, going forward.

Apart from this, LinkedIn has redesigned its member profile pages with larger profile photos and header images. This feature is reminiscent of the other social networking sites such as Facebook FB and Twitter TWTR.

Other newly added features include optimization of profiles with the use of suggested keywords which enhance search results. LinkedIn has also included the “Open” setting which allows premium members' profiles to be viewed by LinkedIn members even outside their network. While these features are available on desktops, mobile versions are expected to be released soon.

LinkedIn's initiatives to increase user engagement by adding new features and providing a lower premium cost are praiseworthy. These will definitely boost LinkedIn's chances to increase its paid-membership count. The company has a total member count of 300 million globally.

Nonetheless, continued investments to provide new and improved products and services might affect its profitability. Though impacting LinkedIn's operational performance in the short run, these investments are necessary for member growth and user engagement over the long term. We remain encouraged by the 45% to 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 #3 (Hold). Investors may consider a better-ranked stock like Micron Technology MU which sports a Zacks Rank #1 (Strong Buy).