Stupid Stock Move of the Day! LinkedIn down?May 31, 2012: 2:01 PM ET
I try not to drink the tech Kool-Aid too often -- although I did work at Red Herring in 2000 and 2001 (Remember those magazines that were the size of phone books ... that were soon replaced by issues the size of leaflets?) Anyway, I get that LinkedIn (LNKD) is an extremely expensive stock. It's trading at more than 130 times 2012 earnings estimates and about 10 times revenue forecasts. That is rich. But why is the stock down more than 4% today on no news?
Investors may be trying to make the point that LinkedIn, like Facebook (FB) is over-hyped. LinkedIn shares have now fallen more than 10% since Facebook's ill-fated IPO nearly two weeks ago.
But LinkedIn is not Facebook. It's better than Facebook. LinkedIn does not rely on ads. It generates a majority of its revenue from fees. And LinkedIn is growing at a much faster rate than Facebook. Analysts expect profits to nearly double this year, compared to earnings growth estimates of less than 30% in 2012 for Facebook.
LinkedIn is also helping to quickly make Monster Worldwide (MWW) and other online job sites obsolete. And the company is growing this rapidly in what's a pretty lousy job market right now. Imagine how well LinkedIn might be able to do once companies are more aggressively hiring? Yes, expectations are high and LinkedIn is not a stock for the faint of heart. But it shouldn't be suffering just because Facebook has been a flop.