Investors aren’t endorsing LinkedIn’s stock Friday morning.
After the professional social networking company revealed weaker than expected guidance Thursday afternoon, Wall Street sent the stock tumbling. Shares had dropped as much as 40% in morning trading.
That’s despite the fact that LinkedIn posted what Morningstar analyst Neil Macker called, “a strong end to 2015 driven by strong performance across all three segments.” The company surpassed investor expectations of revenue and profit for 2015, posting adjusted earnings of 94 cents per share vs. the analyst consensus of 78 cents.
But investors are far more concerned about what LinkedIn will do in the future than what it did in the past. And the firm’s executives forecast adjusted profit in 2016 of 55 cents per share for the first quarter, below the average analyst estimate of 74 cents, according to Thomson Reuters I/B/E/S. The firm also forecast revenue of $820 million, vs. expectations of $866.9 million.
“In this market, there’s no mercy for a miss,” James Cakmak, an analyst at Monness Crespi Hardt & Co, toldBloomberg. Morningstar’s Macker concurred, arguing that “We don’t believe [yesterday’s closing price of $192.28] provides a large enough margin of safety” for investors.
- Here's Where All The Strongest Hurricanes Have Hit the U.S. in the Past 50 Years
- 2022 Time100 NEXT: TIME’s List Of Emerging Leaders Who Are Shaping the Future
- Industrial Farming Causes Climate Change. The ‘Slow Food’ Movement Wants to Stop It
- Here Are the 12 New Books You Should Read in October
- Artist Oliver Jeffers Wants to Paint the World Out of a Corner
- A Vibrant North Korean Community in London Finds Its Days Are Numbered
- COVID-19 Vaccines Can Make Periods Longer, Study Says
- Column: What Happened When My Entire Family Came Out