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LNKD – LinkedIn Looks Beyond Job Ads to … Underwear Ads?

lnkd linked in stockLinkedIn (LNKD) is engaging in a quirky campaign with Berkshire Hathaway (BRK.A, BRK.B) subsidiary Fruit of the Loom. According to reports, 25,000 LinkedIn members who change jobs or find a new employer will get a special offer for a free set of undies from Fruit of the Loom delivered to their LNKD inbox.

“We’re all excited for you about the new gig,” the LinkedIn message reads. “To show this, we’re hooking you up with a complimentary pair of Fruit of the Loom. Because great-fitting underwear can help you start your workday in a great mood.”

Weird.

But interesting, too. Especially for LNKD investors hoping that LinkedIn can continue its big growth by finding new revenue streams in the years ahead.

LinkedIn Stock – More Than Job Ads

LNKD is up more than 100% year-to-date in 2013, and LinkedIn stock has climbed 270% from its lows in the weeks after its 2011 IPO.

That’s because unlike some social media stocks like Facebook (FB), which faces risk to its existing business by the shift to mobile, or Yelp (YELP), which isn’t even profitable yet, LinkedIn has an established and profitable business model that it can simply turn up the volume on to increase sales and profits.

LinkedIn earnings in August impressed because of this. Revenue of $363.7 million and adjusted profits of 38 cents per share topped expectations on both fronts, and revenue increased 60% year-over-year while earnings almost doubled.

That growth was because of a surge in recruitment products revenue at LNKD, regarding subscription-based services for both businesses and job seekers.

But LinkedIn stock is rapidly moving beyond just job ads and job seeking tools.

Take its Influencers publishing effort — an ambitious move to get LNKD into the content biz with tips about starting a business or succeeding in corporate America.

Also, consider increasing efforts to focus on brands, companies and groups instead of just people — providing networking (and revenue) opportunities for businesses on LinkedIn in addition to individuals.

The Fruit of the Loom effort is another interesting LinkedIn experiment to move beyond simply job ads and recruitment into other areas. Marketing pushes like this, if they prove effective, will be a very nice sweetener to LNKD revenue.

Should You Buy LNKD?

Of course, efforts like this take time to get off the ground, and it will be a while before LinkedIn stock sees any material impact from either its Influencers content or from marketing pushes like the underwear blitz.

Meanwhile, LinkedIn stock is very frothy, with a forward price-to-earnings ratio of more than 100. And furthermore, the government shutdown could derail economic growth and have an impact on job ads. Remember that as a company plugged into employment trends, LNKD is very cyclical in regards to labor market health.

Given the macro risks and the crazy valuation, it might not be prudent to chase LNKD right now — either for instant gains or for the expectation of long-term success thanks to these new efforts.

However, that doesn’t mean investors should bet against LinkedIn. A momentum stock like this can always keep running despite a high earnings multiple — just look at Tesla Motors (TSLA) as proof. And furthermore, the Twitter IPO buzz could cause a sympathy rally across all social media players in the months to come.

Just tread lightly in LNKD stock. Because while LinkedIn clearly has a profitable and growing business, valuation and sentiment are a much bigger player right now than the balance sheet.

Related Reading on LNKD

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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