Yahoo Finance LinkedIn Shares Plunge 40% On Global Squeeze
LinkedIn shares plunged by as much as 43% in Friday trading after it reported lower than expected revenue and profit forecasts - blaming the world economic slowdown.
The company, which operates the world's largest online network for professionals, also said in its after-hours trading statement on Thursday that advertising revenues rose 20% in the fourth quarter - its slowest pace in more than two years amid competition from ads offered by Google.
Its share price fell more than 25% in unofficial late trading then collapsed when Wall Street opened for business on Friday.
Its market value was chopped by almost $11bn at one stage while other tech stocks on the Nasdaq also came under pressure.
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) .
