Scalper1 News
It was a shocking day for LinkedIn ( LNKD ) when the business networking company reported fourth-quarter earnings on Feb. 4 that led to a 44% plunge in its stock price. In its Q4 earnings conference call, LinkedIn executives revealed a company reshuffling that had many observers scratching their heads. Analysts slashed price targets as LinkedIn announced it would shutter a unit worth about $50 million in revenue, a move one analyst called a “gigantic mistake.” Apparently it wasn’t. LinkedIn committed new resources toward newer products that cashed in when the company reported first-quarter earnings after the close Thursday that walloped expectations. LinkedIn reported Q1 revenue of $860.7 million, up 35% year over year and beating the consensus of $828.5 million. Earnings per share minus items rose 30% to 74 cents, beating the consensus of 60 cents, as polled by Thomson Reuters. Its guidance also exceeded views. “We believe LinkedIn righted its ship with a solid first-quarter upside and raised guidance,” wrote Needham analyst Kerry Rice, who maintained a buy rating and price target of 200. Many of the issues LinkedIn revealed were not as severe as expected, Rice wrote in a research note. LinkedIn generates revenue from three business segments. Revenue from Talent Solutions, which gets fees from companies and headhunters seeking hires, rose 41% to $558 million. Revenue from Marketing Solutions, which sells ads, increased 29% to $154 million. Revenue from Premium Subscriptions increased 22% to $149 million. In its reshuffling, LinkedIn created products such as Referrals and Connectifier, online platforms that help customers drive a greater share of hiring through LinkedIn. In its Marketing Solutions unit, LinkedIn redoubled its focus on Sponsored Content. which provides targeted advertising that appears in the feeds of social platforms on LinkedIn. These new products and others were a significant contributor that helped LinkedIn beat expectations. Sponsored Content revenue rose 80% and is the fastest-growing segment of Marketing Solutions, LinkedIn said. “LinkedIn posted Q1 upside across every business unit,” wrote Pacific Crest analyst Evan Wilson in a report. “We are confident in LinkedIn’s uniquely valuable data set and think the company has set itself up for further upside over the balance of the year.” Wilson has a overweight rating on LinkedIn stock and a price target of 190. Jefferies has a buy rating and price target of 180. RBC Capital Markets has a market perform rating and price target of 160. Nomura has a buy rating and price target of 180. LinkedIn stock was up 3%, near 126.50, in afternoon trading in the stock market today . Since the 44% plunge three months ago, LinkedIn stock is up 15%. Image provided by Shutterstock . Scalper1 News
Scalper1 News