I strayed from my usual tactics, and I got smoked on LinkedIn (NYSE:LNKD). Generally, a straddle for LinkedIn's earnings would be a no-brainer call - it's the same strategy I employed for Facebook (NASDAQ:FB), Netflix (NASDAQ:NFLX) and Green Mountain's (NASDAQ:GMCR) earnings. In this case, however, I read tons of bullish analysis on LinkedIn and decided to scoop up some calls that are now likely worth fractions of what I paid.
As I stated yesterday about Twitter (NYSE:TWTR), with the skeptical market we've had so far this earnings season, if you're not delivering EPS, revenue and guidance all above expectations a la Michael Kors (NYSE:KORS), you're not going to get any love from this market. LinkedIn delivered everything but the guidance for investors today.
LinkedIn is part of a litany of social media stocks that I've often recommend as potential hedges for your portfolio heading into 2014. Most of these social media names trade at extremely lofty multiples and are prime targets for having their valuation roped in.
The company reported EPS of $0.39 versus expectations of $0.38 (ex-items) and revenue of $447.2 million, which beat analyst expectations by $8.92 million.
The company is trading lower, however, on weak guidance. The company's press release stated:
- Q1 2014 Guidance: Revenue is expected to range between $455 million and $460 million. Adjusted EBITDA is expected to range between $106 million and $108 million. The company expects depreciation and amortization to be approximately $48 million, and stock-based compensation to be approximately $68 million.
- Full Year 2014 Guidance: Revenue is expected to range between $2.02 billion and $2.05 billion. Adjusted EBITDA is expected to be approximately $490 million. The company expects depreciation and amortization to be approximately $225 million, and stock-based compensation to be approximately $325 million.
In conjunction with earnings, LinkedIn also reported that they were going to be acquiring a company named Bright:
LinkedIn (LNKD) , (NYSE:), the world's largest professional network on the Internet with approximately 277 million members worldwide, today announced it agreed to acquire Bright, a company that leverages data insights and matching technology to connect prospects and employers.
With regards to the company's guidance, it's worth pointing out that the company has traditionally guided on the light side. LinkedIn beat earnings in the third quarter of this year and also guided light for the quarter it just posted a beat for.
Analyst sentiment on the company going into earnings today was mostly a "buy" sentiment. Tomorrow, we'll find out if the guidance issued for 2014 triggers any analyst downgrades.
From a technical standpoint, the $200 level has been an extremely important level of support/resistance for the company. Depending on where the stock opens tomorrow morning, this same level is likely to show us whether or not LinkedIn can hold or potentially start a bigger trend downward.
For the long-term I take the same cautious outlook on LinkedIn that I do with companies like Yelp and Facebook. Long term, I'm not taking any further position on LinkedIn here.
LinkedIn shares are off 11% to $199.28 in after-hours trading.
Additional disclosure: I have LNKD calls.