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.

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.”

Written by Peter Mondrose

Peter Mondrose

Peter Mondrose is the Editor-In-Chief at BusinessPundit. He received his degree in Economics in 1998 and a second degree in Journalism in 2004. He has served as a financial adviser, market trader, and freelance journalist for the last 11 years. When he's not investigating market conditions and reporting on workplace news, he can be found traveling with his wife, dog, and laptop. He can be reached at PeterMondrose@BusinessPundit.com or (929) 265-0240.