LinkedIn Gives Wall Street a Tiny Bit of Cheer, Then Something to Worry About

Investors sold and sold and then sold some more on Thursday. And then, after LinkedIn announced its Q2 earnings Thursday afternoon, some folks started buying again.

LNKD shares, which had dropped 10 percent during the day, shot up 10 percent again after the company beat analyst estimates for both the top and bottom lines and produced a revenue chart that looked like this:

Since then investors have cooled a bit, and LNKD is up around five percent.

As always, it’s dangerous to assign too much meaning to any individual stock’s rise and fall in the short term. And even more so for a company with a low float, like LinkedIn, where the actions of a few investors can have a big impact.

That said! There are at least a couple reasons why Wall Street might be a little bit more cautious about LinkedIn after a minute or two of reflection:

• The company eked out a surprise profit this quarter. But it says that profit margins are going to be cut in half for the next quarter: It’s telling Wall Street to expect adjusted EBITDA of about $10 million on revenues of around $123 million; this quarter it posted EBITDA of $23.6 million on $121 million.
• There’s the whole “what happens to a company that makes money by attracting job seekers and employers and selling advertising if the whole economy bottoms out?” question. That one has always loomed for LinkedIn, and as that revenue chart shows, the company muddled through the dark days of 2009 pretty well. Here’s hoping we don’t have to see them prove they can do it again.