LinkedIn (LNKD) Stock Hammered Despite Earnings Beat
Shares of LinkedIn Corp. (LNKD) were trading down -13.15 or -5.79 percent to $214.00 per share in Friday’s premarket after announcing better than expected earnings for its second quarter late yesterday. LinkedIn stock initially traded as high as $260 per share in aftermarket trading and gradually sold off during a conference call the company held with analysts after the earnings release. LinkedIn closed at $227.15 per share, down -4.85 or -2.09 percent in Thursday's regular trading session.
Mountain View, California based LinkedIn Corp. is a social network website that offers services to people in professional capacities.
LinkedIn reported it had lost -$68 million, or $0.53 per share in the company's second quarter compared to a loss of -$1 million or -- $0.01 per share in the same period last year. On an adjusted basis, the company reported earnings of $0.55 per share versus $0.51 last year. Revenue came to $712 million versus $534 million in 2014's second quarter. The analyst consensus was for the company to report adjusted earnings of $0.30 per share on sales of $680 million.
Initially, the earnings numbers had a significant impact on shares in the aftermarket, with shares rising to as high as $260 per share, nevertheless, shares slid during the conference call when investors became aware that a company which was recently acquired by LinkedIn, Lynda.com, had contributed significantly more than expected to second quarter earnings.
Jeff Weiner, LinkedIn Chief Executive Officer said in the conference call that, "One promotional campaign delivered to LinkedIn members outperformed our expectations by 7x in generating new subscribers, an early signal of what we can achieve when applying LinkedIn 's scale, data, and distribution to Lynda.com's content."
He continued saying, "Creating value for our members enables us to transform the way our customers hire, market, and sell on a global basis through our three diverse product lines. In Q2, Talent Solutions grew 38% to $443 million, inclusive of learning and development revenue from Lynda.com."
LinkedIn bought Lynda.com, an online training company for $1.5 billion in April. Analysts were expecting the newly acquired company to contribute $3 million to second quarter results; however Lynda.com was actually responsible for $18 million. Lynda.com is now expected to add as much as $90 million in revenue for the full 2015 fiscal year, up from a previous estimate of $40 million.
Underlying the better than expected second quarter earnings results is the fact that LinkedIn's display ad business has continued declining, dropping -30 percent in the quarter. The decline was due in large part to mobile users surpassing desktops in the quarter. Mobile usage accounted for 52 percent of all LinkedIn second quarter traffic.
LinkedIn stock has been extremely volatile, trading over $270 per share in February and declining to $194 in May. This morning's action is a clear signal that LinkedIn stock may have reached an intermediate high. The stock is now down more than eight percent, trading under $209 per share.
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