#LINKEDIN STOCK YAHOO PROFESSIONAL#
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Underwriters, however, do have an incentive to promote recent tech IPOs. But once it hit a speed bump this summer, the stock lost three-quarters of its value in a few months.

For years, Netflix (NFLX) was a stock that kept on rising despite a perennially high valuation. No matter how sound their fundamental analysis, they look bad if they tell clients to sell a stock that keeps rising. Speculative rallies are the bane of securities analysts. Why would Wall Street issue reports justifying such an expensive stock only a decade after the great dot-com bust, when some analysts slapped misleadingly bullish recommendations on Internet IPOs? The answers aren’t necessarily nefarious. That influx of shares is common, but it can also affect the supply and demand of LinkedIn’s shares. Not all of the shares will be sold, of course, but the new shares could expand LinkedIn’s float from about 8% of outstanding shares at the time of its IPO to more than 20% today. Two days later, the lock-up period ended for another 24 million shares, and in February, another 55 million shares will be unlocked. 17, LinkedIn had a secondary offering that issued 10 million new shares (the vast bulk of them sold by insiders). That’s because of the tens of millions of new shares that have hit the market in the past month. It depends on further speculation and sheer volatility (exacerbated by the growing short interest on the stock).Īnd unlike the past several months, selling pressure is likely to grow heavy whenever LinkedIn approaches $100. LinkedIn may in fact rise above $84 soon, but it’s a roll of the dice.

#LINKEDIN STOCK YAHOO PROFESSIONAL#

Revenue and membership have been doubling at an annual pace, international expansion is just starting and no formidable competitor has shown up yet in the professional networking space.īut the risk for investors buying LinkedIn at $70 today isn’t that the company is hurting, it’s that there is no rational explanation - beyond pure speculation - why the stock is so expensive. And unlike many of the hot-then-not IPOs of the dot-com years, LinkedIn has a solid business, a strong foothold in a growing market and the promise of years of growth. Barclays Capital (BCS) maintained a buy rating and $93 target, while Canaccord Genuity issued a buy rating and an $85 target. Analysts at other firms have recommended the stock in recent weeks. Even if you value LinkedIn against the 25 cents a share that the Street expects the company to earn in 2012, LinkedIn’s price-earnings ratio is 287. At that valuation, LinkedIn is trading at 1,800 times the four cents a share it earned over the past 12 months. By week’s end, LinkedIn’s shares were back near $72. And each breezed right past the reality that those price targets defy any rational application of fundamental analysis.īut once again, it worked. Each concluded that LinkedIn will soon be trading between $84 and $100. Each of them followed the standard format of weighing the positive against the negative. On the same day, LinkedIn’s three main underwriters issued new reports that raised the firms’ stock ratings, price targets or earnings estimates. It finally hit a new low of $56 a share in late November, losing more than half its value in a little more than six months.Īnalysts responded last week with a new wave of reports. And sure enough, after a few weeks, the stock began another descent. But it worked, within a few days, Linked in was trading back at $102. Each pounded the table, calling it “viral” and “transformative.”Īt the time, I noted that justifying a stock with a triple-digit PE ratio required some stretching of logic, arcane financial metrics and impassioned rhetoric. Morgan (JPM), Bank of America (BAC) and Morgan Stanley, LinkedIn’s three main underwriters.

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That brought out a series of analyst reports from J.P. A month later, however, LinkedIn had fallen back to $60 a share. The professional social network went public in May and surged 138% to $122 on its first day of trading. So it’s strange to see one of the bad habits of the dot-com bubble resurface this year: research analysts, many of whom work for firms that have underwritten Internet stocks, are raising their ratings and price targets on stocks that - even at current levels - are wildly overvalued by any fundamental measure. Few have gone public since June, and those that have ventured forth are trading below the highs they reached in their first days of trading. FORTUNE - The fears of another technology-stock bubble that prevailed in the first half of the year have faded away in the second half as a concerns about Europe’s financial stability took the speculative wind out of many Internet stocks.

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