LinkedIn 1st Quarter 2013 Profits Jump, 3 Reasons The Stock Didn’t

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LinkedIn Shares Drop 9 percent after Q1 2013 Earnings Report:

LinkedIn, the world’s largest professional social media network, reported stellar earnings today but the stock market wasn’t receptive. The company raised the full year guidance from $1.43 billion to $1.46 but the company expects less revenue than analysts were expecting.  LinkedIn expects to generate $342 million next quarter compared to the $359 billion the market is expecting.  The lowered guidance for the second quarter caused the shares to slide in the after ours session from over $200 to $184, but why?

Here are 3 Reasons LinkedIn May Have Rattled Investors Today:

  1. Mobile.  LinkedIn still isn’t a top destination for mobile visitors.  LinkedIn needs to take a page from Facebook that reported mobile now accounts for 30 percent of revenue yesterday and get more visits away from the desktop.
  2. Facebook. Facebook’s growth isn’t necessarily a negative for LinkedIn but there is only a certain amount of time people are willing to spend on a social network.  Unless the sector grows, Facebook’s domination could eat into LinkedIn’s longer-term growth. LinkedIn will need to continue the efforts to keep more people on the site longer via content but that’s not the only source of revenue for the company.
  3. The jobs market is improving – albeit slowly. The improvement in the jobs rate doesn’t bode well for social networking via LinkedIn because less people will need to use it to make viable job prospecting connections.  The magnitude of the improving jobs market is important because more people will update their profile pages with new information and their are positive network effects as more employed people connect with each other.  A stronger economy is a plus and a negative for job related sites of any kind.

These are the top reasons to take a second look at LinkedIn but regardless of this past quarter, LinkedIn won’t have direct competition for a long time.  Improving content distribution and sending visitors to the best articles will be key for improving bounce rates, return visits and overall engagement.  A mobile strategy that is engaging will also help LinkedIn find favor with market participants again sooner than later.

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