Despite Lowered Guidance, Street Still Bullish on LinkedIn

LinkedIn delivered yet another stellar quarter during Thursday’s earnings report, beating the Street’s estimates with revenue of $325 million, up 72 percent year over year.

But traders didn’t like everything they saw. LinkedIn lowered its second-quarter guidance below analyst’ consensus, expecting revenue of $342 million to $347 million and adjusted EBITDA of $77 million to $79 million versus a consensus of $360 million and $85.5 million, respectively. As a result, shares plunged more than 10 percent in the aftermarket on Thursday to about $180, around where it remains as of day trading on Friday.

Here’s the thing: LinkedIn has always provided fairly lowered expectations for its coming quarters, and has always seemed to well exceed those expectations upon reporting earnings. Some analysts who have followed the stock closely know this, and aren’t wavering.

“We think management tends to be conservative and believe there is meaningful upside to guidance,” Stern Agee analyst Arvind Bhatia said in a research note on Friday. “Our revenue/EBITDA estimates remain above guidance.”

It’s not crazy optimism. All of LinkedIn’s key metrics were up significantly year-on-year; LinkedIn’s three revenue streams — talent solutions, marketing and subscriptions — were up 80 percent, 56 percent and 73 percent, respectively, compared to the year-ago quarter.

As are page views, which are beefing up big-time as LinkedIn shifts from being a static site to upload your resume and perhaps visit only when you’re looking for a new job, into a site where content is front and center, where users actually want to return to the site on a daily basis to see something new. That’s why the team under executive editor Dan Roth has introduced items like LinkedIn influencers who pen posts for the network, and more consumer-friendly status and commenting areas inside the stream. Not to mention redesigns galore.

Here’s a thought: LinkedIn could be trying to temper analysts’ wild expectations because of the company’s consistent ability to outperform. No company beats the Street every single time. And remember, LinkedIn made a few ad deals last year that boosted its marketing solutions revenue for a time, but won’t be re-upped for Q2, and therefore won’t buoy the numbers in the same way. So perhaps a bit of temperance will be a good thing for those frothing at the mouth at the company’s crazy price-to-earnings ratio.

We’ll see, though. Right now, analysts seem to think that LinkedIn is just being cautious, as always.

“I think the takeaway from yesterday is that they guide pretty conservatively,” Wedbush Securities’ Michael Pachter told Bloomberg West on Thursday. “The stock is actually off in the aftermarket because they keep doing the same thing — setting the bar super low.”

“They just keep telling us ‘We’re gonna strike out next time,” Pachter said. “But they just keep performing and hitting everything out of the park.”