Last week was a big week for social media, as word got out that online video advertising is expected to double to $8.1 billion by 2016.
But while some social media stocks rose on the news, LinkedIn (LNKD) slid on Thursday. What happened?
Well, a Citigroup (C) analyst called attention to the fact that the number of job postings on LinkedIn grew more slowly in the fourth quarter than in the third quarter. The analyst, Mark May, believes that LinkedIn will at best match the consensus sales estimate for hiring solutions revenue.
Investors reacted to these remarks but it’s clear that much of the analyst community disagrees with May. Currently, the consensus estimate is that LinkedIn will earn 32 cents per share on $384.17 million in total sales for the fourth quarter. This represents 45.5% annual earnings growth and 52.4% sales growth.
I consider LNKD a great long-term position. Looking ahead to FY 2014, analysts forecast 41.6% annual earnings growth and 41.2% sales growth. In just the past week, the analyst community has revised both this year’s and next year’s consensus EPS estimates up 5% and 4% respectively. And this is head and shoulders above the competition. The rest of the Internet Information Providers industry is headed towards an average of 25.9% earnings growth for FY 2014.
Then again, a recent Pew Research Center study said as much, as 22% of its participants replied that they use LinkedIn, vs. 21% for Pinterest and 18% for Twitter (TWTR).
So I wouldn’t worry too much about the recent activity. I consider LNKD a buy.