When I first heard about LinkedIn floating a stock offering I had to repress the urge to yawn. But digging deeper into the company’s finances, traffic, niche and prospects has made me reconsider. Here are three reasons to consider buying stock in LinkedIn’s upcoming IPO:

1) Traffic. We’ve heard all the enormous numbers bandied about: LinkedIn has 90 million profiles, according to Reuters. That’s a hell of a lot less than the 500 million+ users on Facebook, but it’s still a lofty number. What most impresses me about the site’s traffic, though, is its steady growth. Here’s a chart from Alexa.com showing the growth in pageviews at LinkedIn over the past two years:

That’s the sort of growth any company in any industry would like to see, and it’s actually got LinkedIn ranked No. 13 in Web traffic in the U.S (again per Alexa).

2) Demographics. LinkedIn has the sterile feel of a watercooler conversation at the office. It caters to professionals. That may make it a bit less sexy than an IPO along the lines of say a RenRen.com or a Yandex.ru, but it’s actually a rather brilliant niche. It’s the sort of place where businesses are willing to pay to get access to talent pools, promote their operations and hire brilliant engineers away from competitors.

3) Not just talent pools, LinkedIn is a cash pool. Sales at LinkedIn have more than tripled from 2007 to 2009. Through Q3 of 2010, LinkedIn had $161.4 million in net revenue. That was good enough for profits of $1.85 million, per their S-1 filing. The site makes its money by selling ads and “paid subscriptions” to recruiters who are looking to fill positions for other companies. After focusing its initial ad sales efforts on big budget advertisers, LinkedIn has FINALLY launched a self-service ad platform that gives small businesses the ability to advertise on the site. Advertisers can harness the site’s information-rich profiles to display ads to target viewers by job title, company name, or LinkedIn group.

If LinkedIn can maintain its growth rate and convince small businesses of the effectiveness of the company’s ads, it just might be worth that $3 billion valuation. If nothing else, it’ll be a fun stock to daytrade.

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Tags: Alexa.com, Facebook, Facebook IPO, GOOG, LinkedIn, marketing, social networking stocks

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