Financial Markets News: why LINKEDIN IS SINKING

The social network for professionals is foundering, and some analysts say they are not sure if LinkedIn (LNKD) can recover. Last week, LinkedIn shares fell 19 percent to $204.70 a share after the company forecast adjusted earnings of 28 cents for Q2 2015 and $1.90 for the year[1]. These numbers were well below Wall Street analysts’ predictions and clearly unsettled many investors.

Jeff Weiner, LinkedIn CEO, said that there is no cause for investors to be alarmed, noting that the company’s revenue is up 35 percent year-over-year and that the company had actually beaten predicted earnings per share last quarter by a penny. “Q1 was a solid quarter in which we made meaningful progress against our multiyear strategic road map,” Weiner said. LinkedIn analysts blamed lower forecasts on the volatility of foreign currencies. The company’s chief financial officer Steve Sordello explained, “Due to recent currency moves, we expect an additional $50 million impact throughout the remainder of 2015 compared to our original forecast.” However, the company also saw “drastic slowdowns” in three revenue streams insofar as talent, marketing, and premium subscription growth rates were down substantially. Although LinkedIn is still growing in all three categories, it is not growing nearly as fast as it did in 2013 and 2014[2].

Despite falling share prices, analysts have not downgraded the company and many are advising investors to take advantage of the relatively low share values to buy. J.P. Morgan not only reiterated that the stock is currently “overweight,” but added that it was setting a 12-month price target at $300, nearly $100 higher than present share values[3]. Other analysts agreed that the dip in share values represents opportunity. “The guidance appears substantially worse on the surface and does not appropriately reflect the trajectory of revenue and profits,” said a Monness Crespi Hardt analyst.

Do you own LinkedIn stock? Wish you did? Why?

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[1] http://www.marketwatch.com/story/new-york-times-exxon-aig-linkedin-fireeye-earnings-in-focus-2015-04-30

[2] http://www.ibtimes.com/linkedin-lnkd-sees-25-drop-due-lowered-forecasts-slowing-growth-1903931

[3] http://www.marketwatch.com/story/buy-linkedin-stock-on-selloff-analysts-2015-05-01

About the Author (Author Profile)

Carole Ellis is editor in chief of the Bryan Ellis Investing Letter. Under Carole’s leadership, the Bryan Ellis Investing Letter has grown to over 700,000 subscribers, making it one of the largest real estate newsletters in the world. Each day, Carole directly impacts the daily thinking and conversations of real estate investors worldwide by providing thought-provoking analysis and commentary on news topics relevant to serious real estate investors.

Carole has a strong background in research and in the management of respected publications. She holds a degree in English Literature from the University of Georgia, and has substantial research experience in plant biology. She is the former editor of and writer for the University of Georgia’s Research Magazine. She’s also the author of hundreds of articles and multiple books and home study courses published under the names of her clients, many of whom are well known, highly respected real estate entrepreneurs as well.

Carole makes her home in Kennesaw, Georgia with her husband Bryan and 4 children.

Comments (1)

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  1. Al Tril says:

    Actually I wish I didn’t have to concern myself with being in the markets. Unfortunately bonds and various bank accounts don’t pay anything (or less).

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Category: Financial Markets