LinkedIn, the world’s largest professional networking site, beat all Street expectations this Thursday when it announced its second-quarter results despite the nearly $68 million net loss associated with the recent acquisition of an educational technology company aimed at the business sector.
Brian Blau, a market analyst from the technology research firm Gartner, deemed company’s Q2 results “great,” while noting that the visible fluctuations from one quarter to another are linked to the company‘s efforts to thrive in a very competitive environment that is constantly changing due to innovation.
After the earnings report was released, LinkedIn’s stock prices greatly fluctuated as investors were divided over how to interpret the new results. In after-hours, share prices settled lower by 7.7 percent to $209. But before that they rose up to 8 percent.
BGC Financial’s Colin Gillis however blames “the wild gyrations” made to the company’s stock price for the relative stability of its shares’ price since the beginning of the year.
For the second quarter, Wall Street analysts estimated a 30-cent-per-share gain, but the company’s recent earnings report shows that there was a 55-percent-per-share gain. Additionally, economists expected only a $680 million growth in revenue for Q2, while in reality the company pulled off $712 million which means a 33 percent growth.
Shares lost 53 cents last quarter, while last year it only lost 1 cent per share or $1 million. This is due to the deal to buy Lynda.com, an online company focused on providing high-end courses and training to businesses.
LinkedIn’s chief executive Jeff Weiner believes that the recent acquisition may turn out to be a valuable asset and one of the company’s “most transformational initiatives” because it may lure even more users to the site while making the old ones more loyal.
According to the report, the Mountain View, California-based company’s professional networking site has about 380 million registered users, which is an increase of more than 20 percent from last year. The company also reported that web traffic generated through mobile platforms accounts for more than 50 percent of all traffic to its site.
But analysts expect that mobile traffic would grow even larger because the company now covers countries where smartphones are increasingly popular.
Other networking sites including Facebook and Twitter also beat experts’ expectations for their Q2 results. Yet, there were some problems. Twitter had a weak user growth which dragged share prices down. The company reported that the monthly increase of new users was only 15 percent to 316 million active users, a figure dwarfed by Facebook’s 1.5 billion monthly users.
Image Source: Biz Journals
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