What Should META Pay To Acquire LinkedIn?

Earlier this week we wrote that Microsoft (MSFT) ought to divest LinkedIn and that Meta Platforms (META) is the natural buyer. What is LinkedIn worth?

• Meta’s core business - social media platform Facebook - grew approximately 20% in the recent June quarter. Contrast that to LinkedIn - a social media platform - which grew 9% on a trailing 12-month basis.

• META shares trade at 8.6x Enterprise Value to Revenue. Therefore, given the disparity in Revenue growth, if LinkedIn was a standalone company, it ought to trade at a lower EV/Revenue multiple (we are using EV/Revenue for purposes of this discussion as Microsoft publishes LinkedIn Revenue, but not Operating Income).

• What EV/Revenue multiple is appropriate for LinkedIn? 3x is probably a bit too low. A 4x multiple implies an Enterprise Value of $65 billion. It is important to consider that MSFT paid $26 billion to acquire LinkedIn in 2016. A 5x multiple implies an $82 billion valuation, which feels too rich given LinkedIn’s slowing growth. You be the judge..

---