LinkedIn share price plummets as second quarter outlook fails to impress

 
Sarah Spickernell
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The company has had a great year until now (Source: Getty)
LinkedIn once again beat expectations, but a bleak outlook for the second quarter didn't go down well with investors.

The figures

During the first three months of 2015, the social networking site's revenue went up to $638m (£415m), 35 per cent higher than last year's first quarter figure.
This was ahead of the $636.5m analysts were expecting. The $0.57 earnings per share were also above analyst predictions of $0.56.
But it wasn't all good news that the company had to share – it projected second quarter revenues to be between $670m and $675m, which was below estimates of $718.3m. Similarly, its predicted earnings of $0.28 per share were lower than expectations of $0.74.
In reaction to the figures, shares in the company dropped by over 20 per cent during after-hours trading

Why it's interesting

The news has resulted in an abrupt change in the company's fortunes. Over the last year, strong business demand and a solid increase in users has allowed the social media network to grow consistently, with strong revenue streams.
In the fourth quarter of last year, LinkedIn posted a revenue of $643m, which was 44 per cent higher than the previous year and way ahead of the $617m analysts expected.

As a result of its continued success, the company's share price has risen by 60 per cent over the last 12 months, giving it stronger growth than many of the more famous social networking platforms.

What LinkedIn said

Jeff Weiner, chief executive of LinkedIn, said:
Q1 was a solid quarter in which we made meaningful progress against our multi-year strategic roadmap. During the quarter, we maintained steady growth in member engagement while achieving strong financial results.

In short

LinkedIn's first quarter earnings were very good, just as everyone was expecting. But it looks like the company's excellent progress may soon come to an end, and this news shook investors.

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