The business social network reported a GAAP loss of 11 cents per share, or $13.4 million -- despite a 46% rise in revenue, compared to the same quarter a year ago. Management attributed the loss to stock-based compensation and its $120 million acquisition of job-matching service Bright.
Excluding special items, LinkedIn would have posted a 38-cent EPS gain on $473.2 million in sales. Those numbers beat Wall Street consensus estimates by 4 cents and $6.5 million, respectively, according to figures compiled by the Analyst Ratings Network.
Typically, investors focus on non-GAAP earnings. However, many on StockTwits were not willing to ignore the GAAP loss this quarter. They said the loss showed LinkedIn needed to spend too much money in order to make money.
$LNKD Why do they say "If not for the costs of employee stock compensation and certain other expenses?" How would they make Rev without?-- Mike (@scottsdalem) May. 1 at 06:47 PM
$lnkd Co. has NO Earnings, Zero, Zilch, No Dividends and Zero Real Profits Expected) Does that about sum it up?-- Poligraph Poligrafovich (@PP_Sharikov) May. 1 at 06:04 PM
Guidance gave investors more reasons to feel bearish. Management expects revenues this quarter of between $500 million and $505 million. The high end of that guidance is beneath the $505.8 million Wall Street expected, according to stats on Yahoo! Finance. Management raised full-year guidance from prior figures. It now anticipates 2014 revenue to come between $2.06 billion and $2.08 billion. However, that number falls short of the consensus $2.11 billion estimate.
LinkedIn shares fell 4.4% in after-hours trading. The stock had risen 5% ahead of earnings on the heels of Yelp's (YELP) better-than-expected report and corresponding 10% stock jump.
Shareholders Bail on LinkedIn Despite Earnings, Revenue Increase $LNKD-- TickrWatch (@TickrWatch) May. 1 at 06:36 PM
Bearish sentiment on LinkedIn deepened after the earnings announcement. About 58% of investors on StockTwits.com anticipate further declines, according to StockTwits analytics.
Some investors said that the tenor of the questions on the LinkedIn conference call indicate that analysts will downgrade the stock. Analysts asked pointed questions about the number of users who see display ads on LinkedIn's homepage and about monetization efforts in China.
$LNKD As you may have noticed, none of the analysts congratulated the company so far on the CC. Means downgrades tomorrow.-- Mike (@scottsdalem) May. 1 at 05:47 PM
$LNKD: look for a few analysts to downgrade tomorrow. Today's results were just too weak to justify the stock's current price.-- tryingtomakeabuckinthemarket (@contrarianspeculator) May. 1 at 09:50 PM
Bulls disagreed that downgrades were in the works. They argued that LinkedIn's business was strong and that, unlike other social networks vying for ad dollars, the company enjoyed a niche with few competitors that justified its near $19.4 billion market cap.
$LNKD Great company with wide moat just was priced for perfection - ER not perfect, hence sell off-- Omar (@TheStacks) May. 1 at 06:18 PM
But many others doubted that LinkedIn was reasonably priced, given the lack of profits. The company trades at 65 times expected 2015 earnings.
$LNKD is fantastic company but it doesn't worth 20 bln-- kh (@khmusabaev) May. 1 at 05:23 PM
StockTwits users also raised concerns about the limited number of paying users on LinkedIn. Recruiters and firms seeking to hire employees pay to post jobs on LinkedIn and access profiles on the site. LinkedIn management said Thursday that the site has 1.5 million recruiters and 4 million human resource professionals.
And many investors anticipated that the concerns about LinkedIn would spillover into the rest of the social networking sector.
At the time of publication the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.