LinkedIn 1Q earnings top estimates

Earnings HQ: FBN's Cheryl Casone breaks down LNKD's first-quarter earnings report.

LinkedIn’s Biggest Loss Ever

By Technology FOXBusiness

LinkedIn (NASDAQ: LNKD),  the largest professional network on the Internet, is taking one on the chin in what is the company’s worst trading day and its biggest loss ever. The stock is down around 20% or about $50 per share. 

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The culprit? A significant cut in its forecast for the next quarter and the rest of the year, which the company said was due to forex headwinds, and other issues.

During the conference call, Steve Sordello, CFO of LinkedIn said: “Due to recent currency moves, we expect an additional $50 million of revenue impact throughout the remainder of 2015 compared to our original forecast and estimate an additional impact of $13 million for 2Q."

LinkedIn reported 2Q revenue is now expected to range between $670 million and $675 million, with adjusted earnings of approximately $0.28; and 2015 revenue of about $2.90 billion, with adjusted EPS of approximately $1.90.

Sordello also provided information regarding the acquisition of lynda.com, which was acquired in early April for $1.5 billion. He said the company expects to add approximately $20-25 million in revenue for the full year from the deal. But he also noted LinkedIn expects a roughly $15 million revenue impact as the company looks at different approaches to crossselling products from lynda.com and its Talent Solutions unit.

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So how are analysts on the Street reacting to the news…  Interestingly, many have cut their price targets on the stock, but are keeping positive ratings. However, a couple analysts have bucked the trend.

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Sarah Hindlian, an analyst at Brean Capital, may be the only analyst on the Street who has a sell rating on LinkedIn shares.

In her note Hindlian said: “LinkedIn reported results and guidance that brought our Sell thesis rapidly into play. We believe the core businesses are slowing and profitability eroding even before the recent expensive lynda.com acquisition has had the opportunity to weigh on results."

Regarding the acquisition of lynda.com Hindlian said: “We estimated that the acquisition would be a material headwind to margins and noted that the Street may have been underestimating the impact; however, we were still surprised today by the magnitude of these headwinds.”

Others on the Street have mixed reviews. 

“We don't believe the quarter or guidance signal a change in our view of the opportunity at LNKD, but we do question the price paid for lynda.com, given the revenue contribution and negative impact on EBITDA,” noted Paul Vogel, an analyst at Barclays said. He keeps an ‘equal-weight’ rating on the stock, with a revised price target of $225. 

The stock, which had been up almost 10% for the year, could very well close down about 10% for the year before the close today.  Prior to Friday’s blood bath, the last time the stock fell as much was August 8, 2011 when it closed down 17.66%.  

 

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