LinkedIn stock plunges 25% following poor earnings projections

LinkedIn is the latest technology company suffering from a poor quarterly earnings report, following Twitter, Google, Yelp and Facebook all dropping numbers earlier this week.

The current numbers show a 25 per cent plunge in stock price, equating to £5.25 billion off LinkedIn's valuation.

Even though the business social network reported decent revenue and operating numbers, the long term goals were severely slashed following the £1 billion acquisition of Lynda.com and resistance in foreign markets to the service.

The projection claimed it would show revenue of between $670 to $675 million (£438 to £441 million) for the third quarter, much lower than analyst projections of $718 million (£469 million). LinkedIn also projected less revenue per share, with $0.28 (£0.18) per share instead of the $0.74 (£0.48) per share most analysts were hoping to see.

There is a worry in the technology sector when it comes to resistance in foreign markets, especially with LinkedIn reaching saturation levels in countries like the US and UK. It needs markets like China, Japan and India to respond well to its service, allowing people from all around the world to connect and find jobs.

The acquisition of Lynda.com is LinkedIn’s biggest move to date, focused on bringing online courses onto the social network. These courses will be published onto LinkedIn, showing success rates of contractors before the client hires them.

Having that embedded online learning platform on top of the social network should be good for retention and people in disadvantaged countries, who may not be able to learn web design or other IT related skills at school.

LinkedIn needs to embed Lynda.com into the network first. It has not added any connections between the two, but hopefully within the next few months we will see some real integration. LinkedIn is already moving most of Lynda.com’s staff over to its own headquarters.

The drop in stock should not be a worry to those thinking long term, according to several analysts it is a good time to buy and owners of the stock should still hold.