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 Shares of LinkedIn Corp, operator of the most popular social network
for professionals, fell 20 percent in early trading on Friday,
wiping out more than $6 billion of market value, after the company
slashed its full-year forecast.
LinkedIn reported on Thursday its slowest quarterly revenue growth
since it went public four years ago.
The surprisingly weak results followed Twitter Inc's on Tuesday.
Twitter's stock fell by as much as 24 percent, slicing about $6
billion off its market value.
Even Facebook Inc posted its slowest growth in quarterly revenue in
two years last Wednesday, and its shares have fallen about five
percent since.
Facebook's earnings were better than expected, though, and the
comparatively small drop in its stock price indicated a level of
investor confidence not shown to Twitter and LinkedIn.
LinkedIn cited slower revenue growth in its hiring business and a
delay in recognizing revenue from lynda.com - the online education
company it agreed to buy last month - for its weaker results and cut
in profit and revenue forecast.
LinkedIn's shares fell to about $200 in early trading, far below
their record high of $276.17 reached in late February.
At least 23 brokerages cut their price targets on the stock, by as
much as $65 to as low as $172.
Still, in contrast to Twitter, most analysts were upbeat about
LinkedIn's prospects.
"The market is putting LinkedIn in the Twitter bucket," analysts at
Stifel Nicolaus wrote. "We think the market is wrong. LinkedIn is
not Twitter.
"Yes, this is a reset but we believe LinkedIn is a sustainable and
dominant franchise that is becoming woven into the fabric of our
daily professional lives."
Stifel, which has a "buy" on LinkedIn, cut its price target to $250
from $300.
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RBC Capital Markets analyst Mark Mahaney also said the market had
overreacted. "While we are incrementally less positive, we're not 20
percent less positive," Mahaney said.
RBC kept its "outperform" rating, but cut its price target to $275
from $300.
Pacific Crest analysts kept their "overweight" rating while cutting
their price target to $250 from $295.
"We like LinkedIn on its strong fundamentals, the shift
from traditional offline recruiting to online, and its superior
products versus its competition," they said in a note.
Of 41 analysts covering the stock, 31 rate it "buy" or higher while
nine have a "hold", according to Thomson Reuters data.
Only one brokerage, Brean Capital, rates the stock "sell".
"Weaker results were blamed on a large sales force re-org and FX,
but we think the company is scrambling to buy growth and the re-org
is due to product fatigue," Brean analysts wrote.
(Reporting by Abhirup Roy and Tenzin Pema in Bengaluru; Editing by
Ted Kerr)
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