Summary
- Earnings beat but guidance disappointed.
- Guidance was in line with the pattern of growth of the last few years.
- The stock dropped because the market has realized that growth will not be what it has been.
- Valuing the stock at a growth that continues but at a lower rate (in line with history) results in a stock price of $75.
LinkedIn (NYSE:LNKD) announced earnings after the close yesterday beating on both top and bottom line, yet the stock took a dive after the close. As of this writing (7:37am ET) the stock is down -30% at $136. This decline has been attributed to weak guidance that was below expectations with 2016E sales at $3.6-3.65b (vs $3.91b) and EPS at $3.05-3.20 (vs $3.67). It is my opinion that investors should not have been so shocked as sales have been on a declining trend, and the stock is pricey.
