In the midst of Facebook's (FB) controversial public offering, the ensuing fall in price was understandable. Despite the increase in membership, the company simply did not present a sound method of profitability and direction most on Wall Street demand.
Relying nearly solely on advertising revenue to boost their bottom line, there share price along with that of Groupon (GRPN) and several others trapped in a similar state fell hard and fast. However, there was one company in the mix that didn't deserve nearly as much of the backlash. That one company was LinkedIn (LNKD).
Although not immune to the ever changing landscape that defines the industry, LinkedIn barricades itself effectively by charging the majority of users that choose to use the website. Ranging from $19.95 for a business membership to $99.95 for a monthly executive subscription, the fees are accepted by members who grow increasingly interested in expanding their own careers.
As far as career expansion, the company surely holds its own end of the bargain. In a time mired by mediocre job creation, the website provides users a chance to put their own resumes front and center. All the while presenting employment opportunities one might not have even recognized before joining. That noticeable difference between both LinkedIn and Facebook might finally be noticed by traders. Overall, a very positive sign for LinkedIn shares in the near term.
For one of the first times since Facebook went public, the two stocks had noticeably different trading patterns this past week. While Facebook's highly touted recovery met with a 6% correction and a nearly 1% drop during the huge market rally on Friday, LinkedIn gained while also enjoying an over 3% jump Friday.
With Facebook's misfortune apparently out of the way, shares seem primed to return to the $120 level they touched in early May after beating earnings by six cents. With the company surpassing estimates on all four earnings reports to this point, the risk shares pose also appears minute for the time being. Especially since earnings are expected to grow another 83% next year after anticipated growth of 144% this year.
However, for those interested in taking up a position be forewarned the $120 level remains strong resistance. The $122.70 high the company hit on its IPO day remains its all time high and the failure of shares to clearly break that threshold following the latest earnings report only reemphasizes the strength of that resistance.
Those interested in buying shares should also implement stop loss orders at $90 as that level proved support during the shares most recent correction.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
