LinkedIn Loses Ground on Wall Street After Latest Earnings Report

The news dragged its shares 28% lower after the bell on Wall Street last night.

Online ad revenue growth slowed to 20 per cent in the fourth quarter from 56 per cent a year earlier as automated ads offered by Alphabet Inc’s Google make its traditional ad displays less attractive to advertisers. However, the company provided a weak outlook for its coming quarter due to ongoing weakness in global markets.

The rout in the stock cost LinkedIn chairman Reid Hoffman about $1.2 billion based on his 11.1 per cent stake in the company he co-founded, according to Reuters calculations.

The social networking site for professionals is expected to report revenue of 7.6 million, up 33% from the year-earlier quarter.

The action of the United States professional social network LinkedIn slumped over 40% Friday on the New York Stock Exchange, after a disappointing forecast for 2016, raising fears of a slowdown in growth.

In an email to Benzinga, tech expert Sean Udall mentioned that, “My best guess on LNKD is that the job’s market is decelerating very rapidly contrary to FED rate HIKE hopes and dreams”. In a recalibration of its advertising strategy, LinkedIn plans to drop its Lead Accelerator platform by the first half of 2016 as it required more resources than expected. On a non-GAAP basis, diluted EPS was $0.94, surpassing analysts’ estimate of $0.78.

For the first quarter of 2016, Wall Street expects LinkedIn to deliver earnings per share of 74 cents on revenue of $867 million.

Despite the strong finish for 2015, the company disappointed investors by forecasting adjusted earnings for the current period will be 55 cents a share on revenue of roughly $820 million (roughly Rs. 5,545 crores).

The company reported a net loss of Dollars 8.4 million, or USD 0.06 per share, attributable to the company for the fourth quarter ended 31 December, as expenses surged.

The revenue forecast of $820mln is also well below expectations.

In the quarter, cumulative members grew 19% to 414 million, unique visiting members grew 7% to an average of 100 million per month, and member page views grew 26%.

A lot of those things aren’t going so well for LinkedIn. LinkedIn has been expanding to China, and trying to improve user experience of its desktop and mobile applications. SunTrust downgraded shares of LinkedIn Corp from a “buy” rating to a “neutral” rating and decreased their price objective for the stock from $250.00 to $155.00 in a report on Friday.

The company faces headwinds in its online ads and recruitment services businesses in markets outside North America.