LinkedIn Mania Over? Shares Plunge 21% After Hours on Earnings Miss

Courtesy of Mish.

It's tough predicting the end to manias. Tonight I ponder a 21% plunge in extended hours trading in LinkedIn. Is the mania over?

Please consider LinkedIn Plunges as Second-Quarter Forecast Misses Estimates.

LinkedIn Corp.’s shares plunged as much as 27 percent after the company delivered quarterly revenue that missed analysts’ estimates for the first time, shaking confidence in a historically stable business plan.

The professional-networking website also forecast sales that missed projections for the second quarter and cut its guidance for annual revenue, citing the strong U.S. dollar and slower-than-predicted growth.

“This is an extraordinary miss for a company that has by and large avoided any major blowups since going public,” said Paul Sweeney, an analyst at Bloomberg Intelligence.

Since its debut as a public company in 2011, LinkedIn has steadily surpassed estimates for sales until now. The company, with its mix of job-related tools for consumers and businesses, has been expanding its offerings every year under Chief Executive Officer Jeff Weiner, through acquisitions and rapid hiring. Those efforts aren’t translating to as much revenue growth as expected, Sweeney said.

Second-quarter revenue will be $670 million to $675 million, the company said Thursday. Analysts had predicted $718.3 million, on average, according to data compiled by Bloomberg. LinkedIn also trimmed its forecast for annual revenue to $2.9 billion, from $2.93 billion to $2.95 billion.

The company’s shares fell 21 percent in extended trading, after dropping 2 percent to close at $252.13. The stock had gained 9.7 percent this year.

Profit excluding some items was $73 million, or 57 cents a share, matching analysts' predictions. LinkedIn’s net loss widened to $42.5 million, or 34 cents a share, from $13.4 million, or 11 cents.

Mania in Pictures

Blame Game

LinkedIn blamed the plunge on strength in the US dollar. It generates 39% of its revenue outside the US.

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