It’s an unfortunate coincidence for LinkedIn that reporting for its first Quarterly Earnings Release since its May IPO should occur during the Debt Ceiling fiasco in Washington, this week.
The combined body blows from the government wrangling, poor U.S. employment and consumer spending reports, and unease over Spain and Italy in the EU have sent stocks tumbling. Add to this Wall Street’s sensitivity to SEC wrath by ensuring that ratings by their analysts are not influenced by the underwriting department. It’s a volatile mixture.
Yesterday, it added up to some bad news for LinkedIn: Morgan Stanley joined JP Morgan Chase in downgrading LNKD. That both MS and JPMC were major underwriters of the LinkedIn IPO in May makes the news sting. LNKD has now dropped 17% since JPMC issued its downgrade mid-July.
As I blogged yesterday, the real issue in the minds of the market is LinkedIn’s ability to achieve the long term revenue growth implied by its stock valuation. I don’t think the outlook is at all shabby. Like it or not, though, LinkedIn is being compared to Facebook and Twitter - especially when it comes to advertising revenue generation.
Yes, they are all social media. Yes, paid advertising is a large revenue source for them. And perhaps the stock valuation has been made against the wrong standard. However, LinkedIn’s target market and its offerings are more narrowly focused than those of its two companions. This doesn’t make it bad to own as a stock, and it doesn’t make it a poor choice for advertisers.
No comments:
Post a Comment