LinkedIn (LNKD, Financial) shares initially jumped more than 11% but then dipped more than 2% to $223.96 in after-hours trading after the company´s Q2 results.
Revenues and EPS
The company reported second-quarter loss of $67.7 million, or $0.53 a share, higher than its year-ago loss of $1 billion. Excluding items, earnings raised to $71 million, or $0.55 a share, from $63 million, or $0.51 a share, beating analysts' estimate by $0.15.
Revenue grew by 33% year over year to $712 million, beating the average estimate of $679.7 and posted a quarterly net loss of $68 million, of $0.53 per share, versus a year-ago loss of $1 million, or $0.01 per share.
CEO Jeff Weiner said the company achieved more member and customer value in the second quarter while showing solid financial results. He also said that “we continued to invest in our long-term strategic roadmap and began integrating the acquisition of lynda.com that closed during the quarter."
Guidance
The firm's guidance for Q3 is revenue in the range of $745M-$750M above the $743.7M consensus. For the full-year, the company expects revenue of $2.94 billion above $2.91 billion consensus. On a per-share basis, the company expects Q3 adjusted earnings of $0.43 per share in line with expectations and projects full year 2015 adjusted earnings of $2.19 per share above the consensus of $1.93 per share.
Ratings
Most analysts have a bullish opinion on it: 1 Sell Rating(s), 5 Hold Rating(s), 29 Buy Rating(s), 2 Strong Buy Rating(s). When looking at the consensus price target, it stands at $258.6 according to MarketBeat, giving a 13.85% upside potential.
Final comment
The company is the largest professional social networking website that ever existed. A very important intangible asset is its users, with more than 300 million users.
Going forward, I think that opening its platform to new applications to create new products will benefit the firm and should increase its revenue per user. This is key in a company where expenses grow faster than revenue.
Although I am not as bearish as Manning & Napier Advisors, Inc which sold out the stock in Q2, looking at the future, I must say that I worry about competitors that could gain market share or make LinkedIn reduce its margins.
Some analyst still believes that the stock is expensive. The stock sells at a forward P/E of 71.43x. To use another metric, its price-to-book ratio of 8.29x indicates a premium versus the industry median of 3.09x while the price-to-sales ratio of 11.69x is above the industry median of 2.44x.
Disclosure: Omar Venerio holds no position in any stocks mentioned
