Yahoo Finance LinkedIn Shares Plunge On Global Squeeze
LinkedIn felt the squeeze from the global economic downturn after lower than expected revenue and profit forecasts for the first quarter saw shares slump by 28% in after-hours trading.
The company, which operates the world's largest online network for professionals, also reported a 20% rise in ad revenue for the fourth quarter which was the slowest in more than two years – amid competition from ads offered by Google.
Finance director Steve Sordello said the business – which connects recruiters and job-seekers – was facing pressure in Europe, the Middle East, Africa and the Far East (Kuala Lumpur: 5029.KL - news) due to "current global economic conditions".
LinkedIn has been spending heavily on expansion by buying firms, hiring sales staff and growing in China and other markets outside the US.
It (Other OTC: ITGL - news) is phasing out an online ad product called Lead Accelerator in the first half of 2016 which it said would hurt revenue by at least $50m (£34m) this year – after it "required more resources than anticipated".
LinkedIn reported a loss of $8.4m (£5.8m) for the fourth quarter. The company has seen steady revenue growth over the last five years, but it often reports a net loss because of big stock grants that it awards to employees.
Stripping this out, earnings were better than expected. But it was expectations for the current period that disappointed Wall Street.
It forecast profits of 55 cents (38p) per share for the first quarter of 2016, well below analysts' estimates of 74 cents (51p). Its revenue forecast of $820m (£563m) was also well below expectations (Other OTC: UBGXF - news) .
