LinkedIn (NYSE: LNKD) Stock Drops 12% on These Key Earnings Figures

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LinkedIn Corp. (NYSE: LNKD) stock dipped as much as 12.5% in after-hours trading today (Thursday) after the company announced weaker 2014 guidance figures than most analysts expected.  

LNKD is projecting revenue between $455 million and $460 million for the first quarter of 2014. That's well below analysts' estimates of $470 million.

The company's Q4 earnings beat the street at $0.39 per share, compared to consensus estimates of $0.38. Likewise, Q4 revenue of $447 million outpaced estimates of $437.8 million.

Oct 01 04:06 PM
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Price: 203.08 | Ch: 0.00 (0.0%)

For the full year 2013, LNKD nailed analyst projections with revenue of $1.52 billion. That was up from a 2012 figure of $972 million.

The numbers met analysts' expectations, but growth was down. In the previous four quarters, LNKD had beaten earnings estimates by an average of 43.5%. So an earnings beat of a penny in Q4 is uninspiring.

That's not the only place growth was slowing however...

LinkedIn (NYSE: LNKD) Earnings: Where Investors Are Looking

One of the key figures to investors was user growth for LinkedIn.

The social media company reported a total user base of 277 million, up from 259 million in Q3. That 6.9% user growth is a drop from the previous quarter when LNKD reported 8.8% growth.

LinkedIn investors were hoping the company would report a user total closer to 282 million.

Growth also slowed in LinkedIn's "Talent Solutions" division, which is its largest revenue generator. LNKD reported revenue of $245.6 million - an increase of 53% compared to the fourth quarter of 2012. However, in the third quarter LinkedIn had reported year-over-year growth of 62%.

This was the first full quarter for LinkedIn's "Sponsored Updates" program, which according to the company "deliver[s] relevant content to members from marketers in the LinkedIn desktop and mobile feed."

As part of its "Marketing Solutions" division, sponsored updates accounted for 13% of the product segment's revenue. Investors will want to keep an eye on the growth of that figure moving forward.

LinkedIn (NYSE: LNKD) Stock: Shaky in 2014

LNKD stock had climbed 80% in the last year before today's earnings report and closed Thursday at $223.45.

The slowing growth figures and the lower than expected guidance numbers certainly scared investors initially, and for good reason.

"Revenue growth is slowing, although still remarkable, and the magnitude by which the company has been exceeding consensus estimates is shrinking," Analyst Colin Gillis at BGC Partners told clients in a note.

Not exactly a vote of confidence.

The $223 price tag on LinkedIn already seemed high, especially when comparing it to LinkedIn's biggest competitors. Facebook Inc. (Nasdaq: FB) closed today $62.16, Twitter Inc. (NYSE: TWTR) near $50.03, and Monster Worldwide Inc. (NYSE: MWW) at just below $7.24.

It's tough to see LNKD stock continuing upward when revenue, earnings, and user growth are all slowing. Investors have to be wondering if the LinkedIn share price will peak soon.

Admittedly, revenue is high for the social media company, but the fact that LinkedIn is selling itself low on guidance figures is concerning.

If growth figures continue to slide moving forward, the expensive LNKD stock could be in for a major pullback.

Join the conversation on Twitter with #LinkedIn and $LNKD - does this stock have room to climb? And be sure to follow @moneymorning for frequent updates.

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