Shares of LinkedIn Corp, the professional social media operator, fell 20 percent in early trading on Friday, wiping out more than $6 billion of market value, after the company significantly slashed its full-year forecast.
LinkedIn reported on Thursday its slowest quarterly revenue growth since it went public four years ago.
The surprisingly weak results followed Twitter on Tuesday. Twitter's stock fell by as much as 24 percent, slicing about $6 billion off its market value. Even Facebook Inc posted its slowest growth in quarterly revenue in two years last Wednesday, and its shares have fallen about five percent since.
Facebook's earnings were better than expected, though, and the comparatively small drop in its stock price indicated a level of investor confidence not shown to Twitter and LinkedIn. LinkedIn cited slower revenue growth in its hiring business and a delay in recognizing revenue from lynda.com - the online education company it agreed to buy last month - for its weaker results and cut in profit and revenue forecast.
LinkedIn's shares fell to about $200 in early trading, far below their record high of $276.17 reached in late February. At least 23 brokerages cut their price targets on the stock, by as much as $65 to as low as $172. Still, in contrast to Twitter, most analysts were upbeat about LinkedIn's prospects.
"The market is putting LinkedIn in the Twitter bucket," analysts at Stifel Nicolaus wrote. "We think the market is wrong. LinkedIn is not Twitter.
"Yes, this is a reset but we believe LinkedIn is a sustainable and dominant franchise that is becoming woven into the fabric of our daily professional lives."
Stifel, which has a "buy" on LinkedIn, cut its price target to $250 from $300.
RBC Capital Markets analyst Mark Mahaney also said the market overreacted. "While we are incrementally less positive, we're not 20 percent less positive," Mahaney said. Pacific Crest analysts kept their "overweight" rating while cutting their price target to $250 from $295.
"We like LinkedIn on its strong fundamentals, the shift from traditional offline recruiting to online, and its superior products versus its competition," they said in a note.
