Mini-lesson On Stock Valuations
I hope everyone who had boxes for Super Bowl Sunday won some money! Also, that everyone is on time for work this morning (apparently millions of Americans are late or call out on the Monday after Super Bowl…)
LinkedIn got hit in the pocketbook this Friday after not meeting expectations. This led to their stock dropping more than 40%. It was a bad day for LinkedIn but what does this mean in the long term? In my opinion, I do not think there is another service / web site community that can replace LinkedIn. I know there are other platforms out there but none that really provide the depth and breadth of content, job focused professionals like LinkedIn. (Blogger’s note: I am not a LinkedIn investor or spokesperson.)
I do think the company will find its footing and its value – the market does not allow any bad news to pass by without making a dent. As I discuss in my managerial finance courses, valuation of a public company and the idea that stock prices should be at "equilibrium" representing the true value of the company is basically an impossibility. Everything is based on expectations, perceptions and the version of the spin we get from various companies. Like with Yahoo right now there is so much being discussed around corporate decisions, parties and layoffs – but the true idea of what goes on in a large company behind its doors and in every cubicle is a mystery at times to even those inside said company.
To help demonstrate this, I like to tell my students the story about my experiences at a large multinational corporation (MNC). (I tell stories a lot as part of my teaching style; it helps keep the textbook information interesting by relating it to real-life experiences and it has served me well for my lesson-based seminars, speaking engagements and training sessions.)
My story is from when I was part of one division with a large MNC and thought the division was its own company. I mean, I was young and stupid but not that young and stupid I did realize there were other “parts” of the company but really thought we were a stand-alone entity. I thought this way until I was promoted up the ranks into another division of said company and began to meet with the actual CEO and CFO of the whole corporation. All of a sudden, I became aware of the fact that we all were one company and yet no one and I mean no one really knew what the other sides were doing. We had projects being replicated across divisions and corporate was trying to uncover these instances so that we could negotiate corporate pricing and not division 1 pays so much and division 2 pays an additional so much. It was like being a detective or a spy. So many things were done in so many ways and some of it sneakily to avoid full reporting. For example, project over $5m had to go through hoops and ladders to be approved so many projects were $4.9m.
The point is that as much as everyone tried to get a full picture at the C-suite and below, it was very hard. So when it came to reviewing financials, every sector / department rolled up their numbers until it got to the top – did any one person understand every one thing going on in this huge company? It would be an impossible feat to even know a fraction of everything that was going on in said company and yet this is how all large companies are – it is the nature of the beast. In fact, I would argue any company over 20-100 people will potentially also now have an absolute 100% clear picture into what every person is doing/working on. Multiply that by orders of magnitude with a company with thousands of people and the fact that some people are disingenuous and you can have disaster and/or hidden minefields everywhere. We were told by the CFO that every time we launched a project and mis-spent x amount of dollars that it would take x amount of cents off earnings per share (EPS) and this would be disastrous for the stock price. It really was a powerful statement and whenever I tell my students about it we ruminate on how these dollar amounts really impact stock price and what that means to a corporation.
So valuation of corporations is a challenge but missing a profit number or an EPS amount is something that will send stock price falling especially in an economy that is struggling. I am assuming LinkedIn will get back into the right track as they overall had an awesome 2015. More and more professionals, hiring managers and more are using LinkedIn as a way to find talent and to recruit future employees. Having an awesome profile on LinkedIn can get you in the door at many companies for an interview faster than any other way. I will say that I have been sought after as a service provider by clients who see what I am doing on LinkedIn AND I have been sought after by other professional organizations for my content and training programs and more via my work on LinkedIn – or just by sharing the work I am doing via my blog and YouTube to LinkedIn.
There is a lot of value in this website and this community, if you know how to use it. It is NOT Facebook as the popular meme going around LinkedIn says – but just posting that meme kind of shows you are not sure that LinkedIn is NOT Facebook (oh the irony). If you try to apply some of my tips, you can find yourself being sought after on LinkedIn, too.
For more help and information, check out my product page I over a complete LinkedIn profile overhaul along with detailed personalized lessons and instructions on how you can implement your new Next Step profile for $150 or I am now doing value bundle of resume, cover letters and LinkedIn overhaul for $300. I put in at least 8-10 hours of work into every LinkedIn profile I redesign and I do redesign and recreate it to the point that it becomes a better version of your resume, it is interactive, available and always online for recruiters and potential hiring managers to see – order yours today here: http://www.thenextstep1234.com/store/c1/Featured_Products.html
If you want more information, chat with me via my Website or any of my social media channels! Happy Hunting!
Lisa Vento Nielsen