InvestorPlace‘s Tom Taulli recently posited the idea that the social stock bubble could officially be considered “burst.” All things considered, it the thought has merit — a number of high-profile social stocks have been bludgeoned since their IPOs:
- Internet radio company Pandora (NYSE:P) opened up on June 15, 2011, at $16 per share. Today, it trades down nearly 42% at about $9.60.
- Zynga‘s (NASDAQ:ZNGA) social game model is sinking fast since it went public at $10 per share on Dec. 16, 2011. Today’s price? 70% off, just north of $2 per share.
- Daily-deals company Groupon (NASDAQ:GRPN) offered its own stock deal on Nov. 4, 2011, at $20 per share; the stock has suffered quite the price-slashing itself, down 75% since then, at around $6.60 today.
- Of course, the biggest news in social flops, Facebook (NASDAQ:FB), has lost more than 40% in less than three months — a splash so big, it has caused collateral damage.
But take heart! Not all is lost in social media. Rock stars LinkedIn (NYSE:LNKD) and OpenTable (NASDAQ:OPEN) couldn’t be more different — in both their performance against the aforementioned slackers, as well as from each other.
LinkedIn isn’t so much “social,” like Facebook, but more so a business site — in fact, it’s the largest Internet professional network, with 175 million members.
LinkedIn is a place to network, post job openings, find referrals and develop business forums and even sector clubs. Chat rooms form around investment professionals interested in particular industries or segments, and opportunities for jobs and investments abound.
Investors have taken note of the difference, and have thusly been rewarded. After pricing at $45, LNKD shares popped 80% on the first day — and while they had their share of struggles, they’ve managed to gain another 15% since then to their current price around $108. The most recent surge has come after Thursday’s second-quarter earnings report. A few highlights:
- Revenue for the second quarter was $228.2 million, up 89% from the year-ago period’s $121 million.
- Net income for the second quarter was $2.8 million — down from $4.5 million in the year-ago period — but adjusted earnings of 16 cents per share were in linke with analyst calls.
- Adjusted EBITDA for the second quarter was $50.4 million, compared to $26.3 million for the second quarter of 2011.
- LinkedIn bumped up its forecast for sales to $915 million-$925 million from $880-$900 million, clearing the consensus expectation for $908.4 million.
Nicely done. This one is a keeper.
You want a social stock way out of the norm? OpenTable is an online network that connects people who want to eat out with reservation-taking restaurants. That model could not be any simpler: Get online, find your favorite or new restaurant, and make arrangements based on availability.
The model works really, really well both in practice and on Wall Street: At $40, the stock has now doubled its IPO pricing, and is up about 40% since its own first-day rocket. While not knocking it out the park like LinkedIn, the company is holding its own quite nicely.
Second-quarter results showed a 9% decrease in profits, but its (adjusted) 42 cents per share results beat expectations of 37 cents per share, and the miss on actual profit against last year was 1 cent per share. Open Table also continues to bring in the customers, as Q2 revenue came in at $39.6 million, better than last year’s $34.3 million and the consensus estimate of $39.44 million.
Full-year forecasts of $160 million-$164 million also were within expectation of $161 million.
At least for now, it looks like not all social stocks are created equal. Investors just have to do a little digging to find the good ones.
Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing, he did not hold a position in the aforementioned securities.