Since we don’t have enough share data on Linkedin, seeing as it just IPO’d today and whatnot, I decided to use what some are calling a soon-to-be-comp, Monster Worldwide (MWW). What’s the thesis, though? Firms with a big headhunter/job-seeker component track unemployment rate? Track the inverse? Go fish? Let’s take a look at what a decade of Monster’s monthly stock price looks like versus headline unemployment:
As you can see, especially since the beginning of the Financial Crisis, the correlation is actually negative. Over the entire time period, the correlation is negative 0.69, not strong enough that I’d feel comfortable getting into any trading based on the relationship. Whether Linkedin will behave similarly over a sufficiently long time horizon is a big question, but if you think – as many do – that the recruiting business will increasingly represent a larger % of revenues, then its definitely something to keep an eye on. Remember where the money comes from, though; not so much (if at all, really) job-seekers, but from recruiters, advertisers, and those who want to mine user data.