As the largest professional platform of its kind, LinkedIn (LNKD) intends to forever change the way we job hunt and network. LNKD’s massive user numbers — 350 million members covering 200 countries — and its prolific rate of two new memberships attained every second suggest that their goal is more inevitability than probability.
LNKD is already the go-to source for your next career move and even developing your professional brand, where the LNKD platform allows for instant vetting by work colleagues. And new developments should further increase the LinkedIn stock price.
The most pronounced example is LNKD’s acquisition of Lynda.com, an e-learning website that set back the company a cool $1.5 billion.
But rather than a frivolous purchase meant only to satisfy executive egotism, LinkedIn’s successful bid aligns with a specific business strategy: to be the sole provider of holistic professional development. Lynda.com’s platform will eventually pave the way for continuing education e-seminars across every imaginable industry.
Nor is this just corporate sweet talk. In 2011, $35 billion was spent internationally towards on-demand self-education software and applications. Last year, that number reached over $56 billion and is expected to double by the end of the current year.
Management clearly saw the opportunity and potential for LinkedIn stock and fired its lofty takeover bid for Lynda.com.
Unfortunately for long-term LinkedIn stock holders, Wall Street’s “What have you done for me lately?” attitude struck mercilessly when the company warned investors on April 30 that revenue and earnings for the second quarter of fiscal year 2015 will move south against expectations.
The following day, LinkedIn stock veritably cratered, losing 19% of value in the markets and gapping down well below its 200-day moving average, a key technical barometer watched by professional traders.
Despite the recent volatility in LNKD, popular investment analysis firm StreetAuthority made a bullish case for LinkedIn stock, arguing that, unlike other stocks that lose huge chunks of market capitalization over a single trading session, LNKD is a discounted long-side opportunity.
The reasoning is that LinkedIn stock burst past its consolidation range that developed after its May 1 selloff. In addition, the accompanying volume was relatively strong, potentially setting up a longer-term rally as opposed to a short-lived swing trade.
StreetAuthority was confident enough to forecast a 25% gain over the course of 10 weeks.
But how does this interpretive analysis stack up statistically? Quite well, in fact. Over the past five weeks, LinkedIn stock gained more than 10% in the markets, buoyed mostly by a sharp lift in the first week of June.
Given similar conditions, LNKD has a 73% probability that, over the next five weeks, it will return slightly more than 11% gains. This rate of return is almost spot-on with StreetAuthority’s forecast, lending further support to the bull argument.
Typically, a huge gap-down loss in the markets is serious cause for concern, but LinkedIn stock is likely taking a breather for its next step up.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
