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LinkedIn ( LNKD ) saw its stock bomb 44% to a three-year low after the company reported fourth-quarter earnings on Feb. 5, as its Q1 guidance widely missed estimates. In the conference call that followed, LinkedIn acknowledged that a reshuffling of product strategy will impact short-term revenue growth in favor of the long term. Perhaps the most startling announcement was that LinkedIn will shutter a business called Lead Accelerator. That decision cut the company’s 2016 revenue forecast by $50 million, as analysts slashed their price targets on LinkedIn stock. Shares have since regained 11% of that decline, though LinkedIn stock was down 2.5%, near 119, in afternoon trading in the stock market today . Shares have a long way to go to get back near former levels. LinkedIn is scheduled to report first-quarter earnings after the market close Thursday. The consensus estimate for the networking site for professionals is revenue of $828.5 million, up 30% year over year. Analysts polled by Thomson Reuters expect earnings per share minus items of 60 cents, up 5% but a sharp drop from growth of 54% in the prior quarter. RBC Capital Markets analyst Mark Mahaney has a sector perform rating on LinkedIn, with a price target of 156. The Lead Accelerator business had been created out of LinkedIn’s $175 million acquisition of Bizo in July 2014. The technology focuses on boosting the ability of marketers to target prospects and had been considered a high-growth opportunity. LinkedIn said the manpower needed to boost Lead Accelerator was not worth the time and effort, and that it was “a higher-than-anticipated demand on resources.” The move did not go over well with analysts, with one calling it a “gigantic mistake.” Credit Suisse analyst Stephen Ju has an outperform rating on LinkedIn stock and a price target of 176, down from a previous target of 230. “We maintain our outperform rating but do concede that patience will be required for the company to start showing more meaningful catalysts to drive share price appreciation, namely margin expansion,” Ju wrote. Facebook ( FB ) Q1 earnings will come after the close Wednesday. The company soundly beat Q4 earnings expectations on booming mobile ad revenue. Facebook has posted double-digit growth in revenue, year over year, for more than four years — and analysts say another quarter of double-digit revenue growth is coming. The consensus on Facebook revenue is $5.25 billion, up 48%. Analysts expect EPS ex items of 62 cents, also up 48%. Scalper1 News
Scalper1 News