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LinkedIn is Legit … But Overvalued

After blowing out its earnings report after the bell on Thursday, LinkedIn (NYSE:LNKD) popped 18% intraday on Friday and is challenging $150 a share.  After offering at just $45 for its May 2011 IPO, shares have tripled in a little more than a year and a half for insiders — and for those who bought during a brief dip to around $70 after profit taking from the IPO, LNKD has been a doubler in short order.

Charles Sizemore of Sizemore Capital Management was good enough to chat about LinkedIn with me, and we both agree that LNKD has a much better model than Twitter or Facebook (NASDAQ:FB) thanks to the focus on corporate customers and a more educated and wealthy consumer base. There’s also the potential for long-term disruption to the entire job-seeking process online as it steals market share from other job posting/seeking services like Monster Worldwide (NYSE:MWW).

The problem, however, is that the valuation is just way too rich right now.After all, if Apple Inc. (NASDAQ:AAPL) has taught us anything it’s that growth doesn’t always equal big returns for shareholders.

While there are companies like Amazon (NASDAQ:AMZN) that continue to see nosebleed valuations for the long-term, I think it’s a risky game — and not one that I would participate in considering the alternatives as the Dow tops 14,000 and investors start talking about a friendlier bull market in 2013 and beyond.

Listen in and share your thoughts. Would you buy LinkedIn here? If you own, are you selling?

Related Reading:

  • A link to LinkedIn earnings details. (LinkedIn)
  • Meanwhile, there’s trouble at Monster when it comes to profits. (Reuters)
  • Dana Blankenthorn tells you why LinkedIn is still better than Facebook. (The Motley Fool)

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 held a long position in Apple but no other stocks named here.

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