Shares plunge wipes €8bn off 'social network for work'
Published 06/02/2016 | 02:30
DIGITAL economy heavyweight Linked-In's shares were hammered on the markets yesterday, wiping out around (€8bn) $9bn of value.
Shares in LInkedIn plunged by as much as 40pc, after the social network for professionals shocked Wall Street with a revenue forecast that fell far short of expectations.
The company employs around 700 at its European headquarters in Dublin, which was opened by Taoiseach Enda Kenny in 2014.
The stock sank to a three-year low of $124.51 a share in early trading, registering its sharpest decline since the company's high-profile public listing in 2011. At least seven brokerages downgraded the stock from "buy" to "hold" or their equivalents, saying the company's lofty valuation was no longer justified.
"With a lower growth profile, we believe that LinkedIn should not enjoy the premium multiple it has grown accustomed to," Mizuho Securities analysts wrote in a note.
Mizuho downgraded the stock to "neutral" and slashed its target price to $150 from $258.
Raymond James, Cowen and Co, BMO Capital Markets, JP Morgan Securities and RBC Capital Markets also downgraded the stock.
At least 22 brokerages cut their price targets on the stock, with RBC slashing its target by almost half to $156.
LinkedIn forecast full-year revenue of $3.60-$3.65bn, missing the average analyst estimate of $3.91bn, according to Thomson Reuters I/B/E/S.
"This would imply that LinkedIn will grow around 15pc in 2017 and 10pc in 2018," the Mizuho analysts said.
Underscoring the slowdown in growth, LinkedIn said online ad revenue growth slowed to 20pc in the fourth quarter from 56pc a year earlier.
RBC analysts said they had thought LinkedIn was on the cusp of "fundamentally positive" change.
"We were wrong," they said in a client note. (Reuters)