Are LinkedIn Investors Catching a Case of Facebook Fever?
In the first quarter, LinkedIn’s (NYSE:LNKD) net income surged 210 percent to $52.4 million. On a per share basis, the company earned 45 cents per share, beating expectations for 30 cents by a wide margin. Revenue jumped 72 percent to $324.7 million, also beating Wall Street’s consensus estimate for $324.7 million. Furthermore, the professional social network grew its member base to 218 million — an 8 percent increase sequentially, while its premium subscription revenue grew 73 percent to $65.6 million.
But following the release of the company’s earnings report after markets closed Thursday, shares — which had closed up 3.52 percent at $201.67 — crashed down as much as 10.15 percent to $181.20 in after-hours trading. With such a strong quarter, it seems a surprising that investors would bid the company’s stock down so drastically, at least at first glance. But the disappointing guidance LinkedIn gave for the second quarter likely prompted the sell off.
While analysts were prepared for second quarter revenues to come in at $358 million, LinkedIn guided between $342 million and $347 million. Management also said it expected adjusted EBITDA between $77 million and $479 million. For the full year, the professional social networked increased its revenue forecast to $1.43 billion to $1.46 billion and its EBITDA estimate to $330 million to $345 million. This lower-than-expected guidance prompted concerns among investors that the company’s efforts to boost mobile advertising will be slow to kick in, a similar hurdle that LinkedIn’s social network peer Facebook (NASDAQ:FB) has faced.