Author Archives: Scalper1

Why LinkedIn Stock Is Crashing And Analysts Are Slashing Targets

Analysts slashed their stock price forecasts on LinkedIn ( LNKD ) following a fourth-quarter earnings report late Thursday that included a 2016 outlook far below expectations. Even though LinkedIn’s fourth-quarter earnings report soundly beat expectations, the stock closed down a whopping 44% at 108.38, striking a three-year low in massive trade in the stock market today . Perhaps the most startling announcement in the Q4 earnings report was that LinkedIn will shutter a business called Lead Accelerator. That decision cut the company’s 2016 revenue forecast by $50 million. Lead Accelerator was created out of LinkedIn’s $175 million acquisition of Bizo in July 2014. The technology focuses on boosting the ability of marketers to target prospects and had been considered a high-growth opportunity. LinkedIn said the manpower needed to boost Lead Accelerator was not worth the time and effort, saying it was “a higher-than-anticipated demand on resources.” The remaining assets from the Bizo acquisition will be integrated into the company’s Sponsored Content unit, which is part of the larger Marketing Solutions Group. With the change, LinkedIn said it was willing to accept some short-term pain for long-term gain, but it still raised concerns. “The exit from Bizo leaves our confidence shaken about the pace of new monetization of LinkedIn’s unique data set,” wrote Pacific Crest analyst Evan Wilson, who slashed his price target to 190 from 280. “We think LinkedIn is making a gigantic mistake stepping back on investment in its ad network. We would understand if the ad network had grave issues with privacy or if there was no demand from advertisers, but we can see from Alphabet ( GOOGL ), Facebook ( FB ) and Amazon ( AMZN ) that this is not the case,” Wilson wrote. For the year, LinkedIn expects revenue in a range between $3.6 billion and $3.65 billion. The consensus among analysts is $3.9 billion. It expects EPS in the range of $3.05-$3.20 per share, below the consensus of $3.67. LinkedIn provided three reasons for its weaker-than-expected earnings forecast for 2016. In addition to the fading out of Lead Accelerator, it cited a slowdown in premium display advertising as it goes through a shift in strategy. That clipped another $50 million off the revenue forecast. The third reason for weakness is currency headwinds in emerging markets, due to “current global economic conditions.” Some analysts wondered if LinkedIn’s problems go deeper than that. “We do not believe that this alone can account for all of the downside to guidance, implying to us material deceleration in the core business,” wrote RBC Capital Markets analyst Mark Mahaney, who cut his price target on LinkedIn to 156 from 300. LinkedIn has three revenue streams. The largest is Talent Solutions, used by companies to recruit employees and for training and education. Revenue rose 45% to $535 million. Marketing Solutions, which sells ads, rose 20% to $183 million. Premium Subscriptions, fees paid by users for enhanced services, increased 19% to $144 million. Another potential red flag is that page views among all LinkedIn users showed a deceleration in growth. Credit Suisse analyst Stephen Ju cut his price target on LinkedIn to 230 from 300. Cowen & Co. analyst John Blackledge cut his price target to 140 from 272.

So Far In 2016, Utilities, Gold, Oil Trust Shares Rise To The Top

With five full weeks of trading completed in 2016, it’s crystal-clear that investors have preferred defensive sectors over high-growth ones. As highlighted in the previous  IBD Industry Themes column , the Mining-Gold/Silver/Gems industry group has been a top gainer. Through Thursday’s action, the group rallied more than 9% since Jan. 1. On Friday, it heaped on even more gains as the major indexes melted lower. Investors typically seek gold and silver assets as stores of value, particularly when inflation is running rampant. Yet as the commodity and equity markets around the world show today, inflation is not the prime concern — deflation is. And with the U.S. economy still rebounding at a slower-than-normal rate, the theory that investors wish to counteract deflation with dividends is looking solid. Among IBD’s 197 industry groups, at least eight are showing year-to-date gains of 5% or more; four are from the utility sector, which ranks No. 1 in IBD’s stock research tables among 33 sectors. Diversified utilities, water utilities, gas distributors and electric power companies are the standouts. On top of these four utility subgroups, the dividend-rich Oil & Gas-Royalty Trust group is advancing. Through Thursday, it was up 8.7%, spanking the Dow Jones industrials (down 7% through Friday’s close). Oil royalty trusts are specialized corporations that are not taxed at the usual rates, so long as they pay out most of their profits in the form of cash dividends to shareholders. These trusts do not have physical operations or actual employees, but they still own rights to money-producing assets, including oil wells and mines. As seen in the accompanying chart, these stocks have fallen sharply in the stock market, mirroring the big slide in both crude oil and the shares of energy exploration companies. As a result, their yields have skyrocketed. BP Prudhoe Bay Royalty Trust ( BPT ), the largest by market value in the royalty trust group, currently shows an annualized yield of 14%. Yet BP Prudhoe Bay and Sabine Royalty Trust ( SBR ) (5% yield) are showing declining annualized dividends in the long term, based on analysis by IBD sister company William O’Neil + Co. The fluctuating price of crude oil, as well as daily production, will likely affect the amount of dividends paid.

Twitter Closed 125,000 Accounts Linked To ISIS, Terror Since Mid-2015

Twitter ( TWTR ) said on Friday that it has suspended more than 125,000 accounts for threatening or promoting terrorist attacks, mainly related to ISIS, marking the first time that Twitter has revealed the scale of terrorist-related activity on its service. Twitter made the announcement as public debate grows on what government and business can do to spot potential security threats in advance and stop the Islamic State terror group from recruiting new members online. Twitter provided the news in a tweet from its @Policy team linking to its blog post on the topic. “Since the middle of 2015 alone, we’ve suspended over 125,000 accounts for threatening or promoting terrorist acts , primarily related to ISIS,” the blog post said. “We condemn the use of Twitter to promote terrorism.” Since mid-2015, we have suspended over 125,000 accounts for threatening or promoting terrorist acts. Read more here: https://t.co/FQJeOTtPLz — Policy (@policy) February 5, 2016 Twitter also said that it has made other efforts to intercept terrorist communications on its site, including increasing the size of the teams that review reports, a move that Twitter said has “significantly” reduced its response time. “We also look into other accounts similar to those reported and leverage proprietary spam-fighting tools to surface other potentially violating accounts for review by our agents. We have already seen results, including an increase in account suspensions and this type of activity shifting off of Twitter,” the social media site’s blog post said. In a report last year, the Brookings Institution think tank estimated that ISIS supporters used at least 46,000 and up to 70,000 Twitter accounts between September and December 2014. “The Islamic State, known as ISIS or ISIL, has exploited social media, most notoriously Twitter, to send its propaganda and messaging out to the world and to draw in people vulnerable to radicalization,” the Brookings report said. The 125,000 figure that Twitter released Friday implied that either Twitter has been able to step up its terrorist identifications on its social network or that ISIS and its supporters have drastically increased their presence on it since 2014. Twitter’s announcement follows a controversy over the role of social media in the lives of the apparently ISIS-inspired team that killed 14 people in an attack in San Bernardino, Calif., in December. Ultimately, the Federal Bureau of Investigation said that the husband-and-wife terror team did not post pro-jihad sentiments publicly on social media before the attack but sent them in private message communications. Like many of its peers, Twitter regularly publishes a transparency report showing content removed and user data handed over at the request of various governments, including the United States. Twitter stock closed at 15.72, down 7%.