![]() We derived such value by taking the $0.50/share earnings exceedance during the combined last three quarters, annualizing them to $.667/share, and multiplying by a modest P/E ratio of 30 (while LinkedIn had been trading at a much higher P/E ratio than 30 on February 3, 2016). Given that LinkedIn's shares stood at 192.28 on February 4 prior to LinkedIn's announcement of Q4 2015 results, we estimate that (ceteris paribus) had LinkedIn not provided such outlook, and had Microsoft not announced its proposed buyout of LinkedIn, LinkedIn shares would be today at least at 212. Hence, the three quarter combined (Q4 2015, Q1 2016 and Q2 2016) exceeded expectations by $0.50/share. To add insult to injury, LinkedIn's earnings for Q4 2015, which had also exceeded expectations by $0.16/share, were totally overlooked due to LinkedIn's erroneous outlook. If we actually combine LinkedIn's actual net earnings results for Q1 2016, along with its latest results for Q2 2016, the combination of such results turned out to exceed by $0.34/share ($0.35 + -$0.01) where analysts expectations for such two quarters stood on Februbefore LinkedIn had provided the erroneous outlook. In other words, the massive sell-off of Februwas totally unjustified, as LinkedIn's statement that caused the sell-off actually turned out to be not true. Furthermore, earnings for Q1 2016 actually turned out to be $0.74/share, closer to analysts' initial estimate of $0.75/share, as opposed to LinkedIn's guidance of $0.55/share. The latest earnings announcement from LinkedIn beat consensus estimates by a much wider margin than the outlook disappointment provided for Q1 2016 at the release of Q4 2015 results such outlook disappointment guided net earnings $0.20/share below expectations, while the latest earnings exceeded expectations by $0.35/share. Prior to Microsoft's announcement of its acquisition of LinkedIn, the social network company's shares were trading at 131.08 on June 10, 2016. LinkedIn's focus on sponsored content will impact short-term revenue growth in favor of the long term At such time, LinkedIn CFO, Steve Sordello, said: consensus estimates of $0.75/share on revenues of $868.3 million. However, LinkedIn provided a future outlook below expectations, as it announced it expected net earnings of $0.55/share on revenues of $820 million for Q1 2016 vs. Such drop materialized despite LinkedIn announcing net earnings of $0.94/share for Q4 2015 beating consensus estimates of $0.78/share, and revenues of $862 million beating consensus estimates of $558. On February 5, 2016, LinkedIn shares dropped by over 43.6% in a single day, from 192.28 to 108.38, a drop of almost $94, erasing over $11 billion in market capitalization. ![]() However, if LinkedIn had not been acquired by Microsoft, what effect would such earnings have had on LinkedIn's stock price? LinkedIn stock price 5-year chart - Source: Yahoo FinanceĪs LinkedIn is being acquired by Microsoft for $26.2 billion ($196/share), LinkedIn shares had a muted reaction in the after-market hours following earnings release. Finally, Premium Subscriptions revenue increased 21% year-over-year to $155 million, beating consensus estimates of $150.5 million. ![]() Marketing solutions revenues increased 29% year-over-year to $181 million, beating consensus estimates of $168.2 million. Talent Solutions revenues increased 35% year-over-year to $597 million, beating consensus estimates of $576.3 million. Meanwhile, revenues came in at $933 million, an increase in excess of 31% over same quarter last year, and exceeding consensus estimates of $898 million.Īll of LinkedIn's business lines recorded impressive results. Compared to same period one year ago (where LinkedIn had net earnings of $0.55/share), LinkedIn's latest net earnings results represent an increase of 105%. consensus estimates of $0.78/share, a beat by a whopping $0.35/share. Net earnings for the quarter ending in June 2016 came in at $1.13/share vs. LinkedIn announced its earnings after the market closed on, shattering all expectations. ![]() Now that LinkedIn has announced its earnings, our assessment is confirmed. In a recent article we published on prior to LinkedIn's ( LNKD) latest earnings announcement, "Microsoft's rebirth could boost shares by more than 20%", we had stated that we believed that Microsoft's ( NASDAQ: MSFT) purchase of LinkedIn was a bargain. ![]()
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