LinkedIn (LNKD) Shares Pummeled on Guidance

Shares of LinkedIn Corp. were trading down -65.62 or -34.07 percent to $127.00 per share in Friday’s premarket after the company announced better than expected earnings yesterday after the market close. Despite beating the street on earnings and revenue, lower than expected first quarter and full year 2016 guidance disappointed the market. LinkedIn stock closed at $192.28 per share, up +1.03 or +0.54 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.
Founded in 2003, LinkedIn has grown exponentially, having grown to a total of over 400 million acquired users in 200 countries around the world and is the largest professional network on the Internet. In addition, the company has over 30,000 corporate customers. LinkedIn’s average net yearly profits have grown an average of +139 percent every year since its founding and the firm is considered one of the most successful startups of all time.

For the company’s fiscal 2015 fourth quarter, LinkedIn reported $862 million in net sales and earned $0.94 per share from its three primary revenue generators. Analysts forecast the company would make $0.78 on revenue of $858 million.

The Talent Solutions segment, which gives companies access to job seekers accounted for 62 percent of total revenue, the Premium Subscriptions segment contributed 16.7 percent, while Market Solutions, the company’s Ad selling service made up 21.0 percent of revenue for the quarter. LinkedIn reported unique visitors to its website had grown seven percent to average 100 million per month.

Member page views increased +26 percent in the quarter, an improvement of +17 percent over the same period one year ago. The company’s user base increased to 414 million from 396 million in the third quarter.

Steven J. Sordello, LinkedIn’s Chief Financial Officer and Senior Vice President told investors in their conference call after the earnings release that, “LinkedIn delivered a strong end to 2015. We made significant progress on product innovation with the launch of the new flagship product and a refreshed Hiring product portfolio. As we look towards 2016, our focus is on investing intelligently in our core member and customer value propositions to capture the large addressable opportunity ahead of us.”

For LinkedIn’s first quarter of 2016, the company expects revenue of about $820 million with adjusted EBITDA to be approximately $190 million. Non-GAAP earnings per share for the quarter are forecast to be $0.55 per share. The analyst consensus was for guidance of $0.74 per share for the first quarter.

For the full 2016 fiscal year, the company expects revenue between $3.6 and $3.65 billion with adjusted EBITDA of about $950 to $975 million. Non-GAAP earnings per share for the full year are expected to be $3.05 to $3.20. Analysts expected revenue of $3.91 billion for the full 2016 fiscal year.

In addition to announcing quarterly earnings, the company said in its statement that it had acquired Connectifer, a tech startup with search technology that helps company recruiters find potential employees. Connectifer is the latest acquisition for LinkedIn, with two previous acquisitions that include and Fliptop. LinkedIn shares have continued selling off in this morning’s premarket and are currently trading off -35 percent before the opening bell.

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Published on Feb 5, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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