Analyst: LinkedIn May Have Huge Market Potential
The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities.
LinkedIn Corp. (NYSE:LNKD) will report third-quarter 2013 (ending September) results on Tuesday after market close, with a call at 2 p.m. PDT (dial-in: 914-495-8529, conf. ID: 74554060, investors.linkedin.com).
We expect third-quarter results in line with our estimates. We expect revenue of $383 million versus consensus of $385 million and guidance of $367 million to $373 million. We expect adjusted EBITDA of $93 million versus guidance of $81 million to $83 million and earnings per share of 43 cents versus consensus of 32 cents driven by R&D and SG&A operating leverage. LinkedIn historically beats its guidance.
LinkedIn priced a follow-on equity offering during the quarter of 5.4 million Class A shares at $223 per share for a total offering amount of roughly $1.2 billion. The size of the offering makes us believe that a potential acquisition is likely, as LinkedIn does not have any debt and its pro forma cash balance is much higher than what we believe is required for working capital purposes. We note that LinkedIn lookalike Xing (a public company) operates in Europe and has managed to maintain significant market share there in spite of LinkedIn’s growth.