It hasn’t been a good week for social media companies, not even for the usually reliable professional networking service LinkedIn Corp.
The company’s second-quarter results announced beat Wall Street’s expectations on all fronts, just as Facebook’s did on Wednesday and Twitter’s on Tuesday. But it’s the signs behind the headline numbers that seem to be worrying investors, enough for shares of all three companies to fall this week.
LinkedIn “did great this quarter,” said Gartner analyst Brian Blau, while noting that there is “some variability on their efforts quarter to quarter as they are in a very competitive market that is constantly innovating and changing.”
LinkedIn’s stock fell $17.44, or 7.7%, to $209.71 in after-hours trading. The stock fluctuated widely after the results came out as investors digested the earnings report. The stock increased at least 8% before settling lower.
Colin Gillis, an analyst at BGC Financial, said that while LinkedIn’s stock is roughly unchanged since the start of the year, this masks the “the wild gyrations” that have taken place in its price.
LinkedIn’s adjusted earnings of 55 cents per share were well above the 30 cents that analysts polled by FactSet had expected for the April-June quarter. Revenue grew 33% to $712 million, also above analysts’ expectations of $680 million.
Net loss was $67.7 million, or 53 cents per share, which is wider than last year’s loss of $1 million, or 1 cent per share. The company had warned in April that earnings would be dampened by costs related to its purchase of Lynda.com, an online learning company. LinkedIn closed that deal in the second quarter. On Thursday, CEO Jeff Weiner said the deal “could be one of LinkedIn’s most transformational initiatives as it has the potential to improve the member experience across the platform.”
LinkedIn had 380 million members at the end of the quarter, up 21% from a year earlier. The Mountain View, California-based company said traffic from mobile devices represents more than half of all traffic to LinkedIn.
Blau said LinkedIn’s mobile usage should be higher, “given that many of their users are from markets where we have higher smartphone penetration.”
On Tuesday, Twitter disappointed investors when it reported a 15% increase in monthly active users, to 316 million. Its co-founder and interim CEO, Jack Dorsey, said the company is “not satisfied” with the pace of its user growth. But executives also acknowledged that this is unlikely to change for a considerable amount of time.
Facebook, meanwhile, has nearly 1.5 billion monthly users, but its high-flying stock also took a hit as investors sought to take profits and might have had some concerns about the company’s soaring spending.
Also this week, online reviews service Yelp saw its shares plunge after it reported a second-quarter loss and gave a disappointing outlook. The results raised more concerns about Yelp’s ability to survive as an independent company. Its shares dropped to their lowest level in two years.