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LinkedIn Earnings Prove LNKD Stock Is No Fad

LinkedIn (LNKD) reported strong earnings after the bell Thursday, and shares are rallying again this morning as a result.

That’s because LinkedIn earnings are further validation that this stock is a legitimate and growing business, not a social media fad.

Details show revenue of $363.7 million and adjusted profits of 38 cents per share. Analysts expected LinkedIn earnings to come to 31 cents per share on revenue of $354 million, so that’s a beat on both fronts. Year-over-year, Revenue jumped about 60% from $228 million, and earnings almost doubled from 16 cents in Q2 2012.

On the heels of a nice beat from Facebook (FB) after earnings, you might think this is just strength in social media broadly. But LinkedIn is a different beast, relying on more than display advertising.

For instance: In the latest quarter, LinkedIn earnings saw a surge in recruitment products revenue that helped power results. The subscription-based services for both businesses and job-seekers is a great way to add additional revenue.

True, advertising on mobile isn’t as lucrative, and that’s a risk as more LinkedIn traffic moves away from the desktop. There’s also a risk of slowing growth, since LinkedIn’s guidance for the third quarter was below the consensus range.

But LNKD has a real media CEO in Jeff Weiner, who joined LinkedIn in 2008 after serving as a vice president at Yahoo (YHOO) — with experience at the company that runs the once-popular HotJobs employment website. That should help LinkedIn grow responsibly — and since there’s a business brain instead of a programmer with a mind for code but not for profits here, investors can have confidence.

And while LNKD’s Q3 guidance fell short, the company did revise its full-year 2013 expectations up from $1.455 billion to $1.475 billion.

Going forward, it remains clear that people are relying on connections to get jobs in the new economy — and LinkedIn is in the right place at the right time to lead this shift in how people find work.

LinkedIn earnings for the second quarter validate this.

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Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.  As of this writing, he did not own a position in any of the stocks named here.

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