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  • THE LINKEDIN (LNKD) MEGA BUBBLE JUST GOT BIGGER!

    By: Sebastian Toro

    An hour ago LINKEDIN $LNKD post the financial results for the first quarter of 2013 and guess what? the Bubble its getting bigger and its popping

    At this moment shares of Linkedin are taking a beat of the Cliff with a fall of -10%. Today the stock hit a new record high of 201 usd and that was the capitulation and the euphoria phase for this stock.

    The maniacs that buy this stock above 200, I think they wont see this stock coming back to this prices in years, maybe today we saw the top for this stock and in the coming years this will be an study case and example of a euphoria cycle like we saw back in the .com bubble in the 2000s.

    It doesn't matter that the company beat expectations because today the investors and wall street will realize that the guidance and the company growth doesn't have anything to do with the company market cap.

    Today people will understand that its just absurd that a company that foresee Revenues of 1.45 Billions can have a market cap of more than 21 billions dollars. That's almost 14 times revenue, and that's doesn't make any sense.

    The company also said that they expect full year EBITDA to be 340 million... That's not bad at all, But is VERY BAD for a company with a market cap of 21 Billions dollar. We are talking of a company with a EV/EBITDA ratio of more than 55!!

    55 Times projected EBITDA!!! how stupid can that be? Really, I don't understand who is buying this bubble.

    Today the bubble just got bigger because people are waiting this company to grow at 75 - 55% and that's not going to happen.. this company in the coming years well be growing slowly and they will realize that a 20 billion valuation doesn't make any sense.

    Well today the maniacs (I can't call them investors, because they are not) realize that this valuation doesn't make any sense; I think that today we saw the capitulation, and in the next months there's a high chance that we see this stock hitting the 120 - 150 usd range and then maybe we will visit de 100 usd zone.

    Disclosure: I am short LNKD.

    May 02 6:15 PM | Link | 3 Comments
  • Another Bubble Indicator For LINKEDIN (LNKD)

    2 days ago i post an article about the Linkedin bubble : seekingalpha.com/instablog/774421-sebastoro/1647391-is-linkedin-lnkd-the-next-bubble-to-pop

    Today i would like to take another metric that consolidate my point and that metric is the Company value (mkt cap) vs the value per user.

    At the current prices Linkedin has a market price of 19.5 billion dollars. In the last financial report the company says that they have 200 million users.

    That means that at the current prices every linkedin user is worth something like 97.5 usd... and that is just ridiculous!

    Im a member of linkedin, in fact all of my friends, family and co-workers are members and we have never pay a cent to this company neither we have any plans to pay in the future--- so a valuation of 97.5 usd per user?? are you serious?

    Now we get back to reality with 200 millions users and with 972 millions of income, how much money is really getting Linkedin out of members??

    Linkedin has 3 revenue drivers: Talent, Marketing solutions and subscriptions. Lets forget about these 3 drivers and lets focus on the users and what really 200 millions members are worth in terms of income.

    If we have 200 millions members and we have an income of 957 millions that means that means that every user adds 4.86 usd in revenue. But the crazy people that is buying this bubble now is willing to pay the ridiculous number of 97.5 dollars per user. Do you really think that in the future they will make that money? i don't think so.

    Lets see how much facebook pay per user of Instagram.

    FB pay something like 33 usd per user for instagram and the market think that was a crazy number, so imagine 3 times that number and you have Linkedin.

    Another example was Facebook when the wizards of wall street say that the company was worth 100 billions dollars (another bubble).... at that price FB has a value per user of 100 usd---- and so what happened??

    The Facebook bubble pop an today the company have a market cap of 63 billions losing something like 37% of the value and i think it will continue to fall.

    At today prices a Facebook user is worth something like 60 usd and getting lower every day as people realize that this values doesn't make any sense and i think that linkedin will have the same fate.

    The arguments are the same, growth, growth, growth.. but it really doesn't matter how impressive is this company growth because at this prices they have already discount something like 5 years of 50% growth and is still not cheap.

    You have to ask yourself.. Why are the insiders selling like crazy?

    But all bubbles have a way of bursting or being deflated in the end.
    Barry Gibb

    Disclosure: I am short LNKD.

    Mar 15 4:59 PM | Link | 1 Comment
  • Is LINKEDIN (LNKD) The Next Bubble To Pop?

    At this right moment the shares of Linkedin (LNKD) are making new highs at 181 usd, looks like the herd is buying like the shares were about to run out.

    Euphoria is on the air and the bubble keep growing at every minute.

    At this prices the market cap of Linkedin is reaching the 20 billion valuation and the argument for this assessment is the business model and growth of the company.

    In fact the growth of the company is impressive, but we have to get back to reality.... We are talking of a company under the 1 billion Revenue (972 millions) in revenues..Even if the company keep growing at 50% the shares will be a bubble for at least the next 5 years!!

    Growing at 50% for the next 5 years means that in 2017 the company will have revenues of 7.3 billions and maybe at that time you can look at the company and talk of valuations of 20 billions.

    At this price the company is trading at 20.58 times sales, if we look forward the company will be trading at 2.7 sales of 2017.So are you really willing to pay 20.5 times sales for a company? that valuation doesn't make any sense..Is just absurd even with that growth

    Year2012201320142015201620172018
    Revenue0.9721.4582.1873.28054.920757.38112511.0716875
    Price/Sales20.5813.729.146.104.062.711.81

    If we look at the profits the valuation its even more ridiculous.

    The company makes only 20 millions in 2012 and they are expecting a net income for 2013 to be flat, negative or just the same of 2012.. That means that the company its trading at just 1000 times earnings!! (Fw P/E 1000)

    What are investor thinking of this valuation? are they really paying 20 billions dollar for a company that doesn't make a cent in profits?

    If we look the EBITDA they give a guidance of 320 millions for 2013. So the company is trading at a Fw Ev/Ebitda of 57.85x ---- just absurd!! These are the common signs of a bubble.

    Year2012201320142015201620172018
    EV19191919191919
    Ebitda 0.330.500.741.111.672.51
    EV/Ebitda 57.5838.3825.5917.0611.377.58

    If we look forward and we assume that the EBITDA will also grow at a 50% rate (and i don't believe that! i think it will slowdown in the next 3 years) the company will be very expensive till 2016 - 2017 assuming that the price stays at 181 usd.

    The point here is that it rally doesn't matter that the company have an impressive Growth. This is a bubble and the numbers doesn't match with reality. Investors are paying ridiculous numbers for Linkedin and sooner or later the bubble will pop.

    They have a business model that a company like Facebook or Google can get in easy, so this isn't the most impressive model at the time. People say just the same with Monster worldwide (MWW) when the company was trading at 60 usd (now just 5 bucks)

    If we look at the weekly chart the situation is just unsustainable with an RSI of 95.6 at almost 10 consecutive weeks going up.

    The distance with the 20-40 SMA is more than 50 usd and i think that we will see this company trading at lower, lower levels in the next months.

    (click to enlarge)

    The thing with bubbles is that the bigger the bubble, the less force is needed to blow and harder the explosion

    This company makes me feel like i was in the 2000s .com Bubble and it just need a bad news or disappointing results to have a big drop.

    We are taking shorts positions in LNKD at this levels.

    Disclosure: I am short LNKD.

    Tags: LNKD, lnkd, social
    Mar 13 3:41 PM | Link | Comment!
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