Hot Off The Wire – 18 September 2013

On Tuesday, LinkedIn’s stock price closed up 1.10% to $247.69 after hitting a high of $252.17 in intraday trading. The stock is trading above its 50-day moving average of $228.5 and 200-day moving average of $191.1. The company is trading at a high P/E ratio of 946. The stock has gained momentum after LinkedIn Corp. (NYSE: LNKD) announced a billion dollar plus secondary share offering earlier this month.

LinkedIn is a social networking platform, which is used to network professionally. It has close to 225 million users and more than 3 million company pages across 200 + countries. Its platform provides members with solutions, including applications and tools, to search, connect and communicate with business contacts, learn about career opportunities, join industry groups, research organizations and share information.

lkdinOn September 13, 2013, LinkedIn launched University Pages, a new section that offers profiles for educational institutes and lowered its sign-up age to 13. It’s likely to encourage young people to plan out their career paths by comparing themselves to high-achievers on the site.

LinkedIn rolled out mobile ads for the first time last month, hoping to reach the increasing number of users who are accessing the site with their phones and tablets. But the company has said that its advertising business will experience moderate, rather than rapid, growth.

At its quarterly earnings release, LinkedIn reported $0.38 EPS for the quarter, with revenues of $363.70 million for the quarter. The company’s earnings for the quarter were up by 59.4% on a year-over-year basis. LinkedIn expects revenue for the year 2013 to be between $1.46 billion and $1.48 billion.

With a 900+ P/E, LinkedIn shares look expensive at the moment, although prices are partiality backed up by a solid and profitable business model and definite growth prospects. WSA expect 2013 earnings to be in line with guidance around 1.54 and prices to remain in the range of 220 in near to midterm.

Technical Data suggests that the stock is trading above 20-day simple moving average. The tightening of the Bollinger bands could be an early indicator of a sharp rise involatility. MACD, well below Signal line, indicates no clear movement.


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