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LinkedIn Plunges, Torpedoed by Fears of Slower Growth

Bad time to disappoint a jittery market.

Dabarti CGI / Shutterstock

You’d be forgiven for thinking the sky is falling at LinkedIn.

That’s because the company’s stock took a nose dive today. A serious nose dive, plunging more than 43 percent one day after reporting its Q4 earnings, a drop that cut its market value to $14 billion. Believe it or not, those earnings were in line with Wall Street’s estimates. The beating took place because of the company’s weak guidance for next year, which was lower than analysts expected.

The bad news for LinkedIn is that its bad news came at a time when public markets are reacting aggressively. Ten different analysts downgraded LinkedIn stock on Friday, according to Seeking Alpha, which doesn’t bode well for other social platforms that have been pulled down with it. Facebook stock fell nearly 6 percent on Friday. Twitter’s fell more than 7 percent. (The broader market was also down today partly due to the plunging price of oil, which signals a weaker global economy.)

The guidance dip is certainly unsettling, but there’s reason to be concerned about LinkedIn’s audience, too. LinkedIn is still adding new members, but the number of unique monthly visitors didn’t grow over the second half of 2015. Plus, last quarter’s total page views were down for just the second time in the past 16 quarters.


In other words, it looks as though LinkedIn is having some growth issues. And if we’ve learned anything from Twitter, it’s that Wall Street really panics when it looks like growth is slowing down.

One thing to note: LinkedIn just became a lot more affordable for a potential buyer. LinkedIn’s market cap is just over $14 billion, still a sizable sum by any measure, but also similar in size to Twitter, which has been thrown around a lot lately as a potential acquisition or takeover target. It’s anyone’s guess as to who might take a hard look, but the company has lots of content and lots of user data, so you know someone will be looking.


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