LinkedIn sheds $11 billion in value on stock's worst day since debut

Fri Feb 5, 2016 5:48pm EST
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By Supantha Mukherjee and Anya George Tharakan

(Reuters) - LinkedIn Corp's LNKD.N shares closed down 43.6 percent on Friday, wiping out nearly $11 billion of market value, after the social network for professionals shocked Wall Street with a revenue forecast that fell far short of expectations.

The stock plunged as much as 46.5 percent to a more than three-year low of $102.89, registering its sharpest decline since the company's high-profile public listing in 2011.

The rout in the stock cost LinkedIn chairman Reid Hoffman about $1.2 billion based on his 11.1 percent stake in the company he co-founded, according to Reuters calculations.

At least nine brokerages downgraded the stock to "hold" from "buy", saying the company's lofty valuation was no longer justified.

"With a lower growth profile, we believe that LinkedIn should not enjoy the premium multiple it has grown accustomed to," Mizuho Securities USA Inc analysts wrote in a note.

At least 36 brokerages cut their price targets, with Pacific Crest halving its target to $190. Their median target dropped 34 percent to $188, according to Reuters data.

LinkedIn forecast full-year revenue of $3.60-$3.65 billion, missing the average analyst estimate of $3.91 billion, according to Thomson Reuters I/B/E/S.

"This would imply that LinkedIn will grow around 15 percent in 2017 and 10 percent in 2018," Mizuho analysts said.   Continued...

The logo for LinkedIn Corporation, a social networking website for people in professional occupations, is pictured in Mountain View, California February 6, 2013.  REUTERS/Robert Galbraith