LinkedIn stock plummets 35% on weak outlook

LinkedIn Shares

LinkedIn shared plummeted by 34.93% (9:38am EST) in after hours trading, as the company gave a somewhat conservative outlook for the current quarter.

LinkedIn said its sales for the current quarter would come in about 6% lower than Wall Street had expected. The company also said earnings would be 27% below analysts’ expectations.

LinkedIn had a decent three months in the last quarter of 2015. The company’s new mobile app appeared to be helping as membership numbers grew by 19% to 414 million. Visits were also up 7% and clicks on members’ LinkedIn pages climbed by 26%.

LinkedIn Shares Falling

That means mobile, profit, and sales were all up for the final quarter of last year.

Investors had been inflating shares at LinkedIn and it was only a matter of time before investors were spooked by a stock that was trading 52 times the company’s expected earnings for the year. The average ratio for the S&P 500 is 20.

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With such a high valuation, any signs of a slow down was likely to decrease share value.

Analysts at RBC Capital Markets downgraded LinkedIn’s stock and slashed its price target nearly in half from $300 to $156. In a note to investors RBC analysts said LinkedIn’s outlook “implies material deceleration in growth.”