It isn’t so easy anymore for social media companies to delight investors. A day after Twitter‘s quarterly results prompted investors to hit the “Sell” button, LinkedIn weighed in with a cautious first quarter outlook that unnerved investors and sent its stock skidding 11% in after hours trading.
It’s not that LinkedIn isn’t growing anymore. For 2013′s fourth quarter, the company reported revenue of $447 million and adjusted earnings of $111 million before interest, taxes, depreciation and amortization (EBITDA.) Both numbers topped Wall Street’s official estimates, though LinkedIn’s history of beating estimates means many investors probably were looking for even more.
What jolted investors was LinkedIn’s outlook for this year’s first quarter. The Mountain View, Calif., company said it expects revenue of $455 million to $460 million in the current quarter. Analysts surveyed by First Call had been expecting revenue of $470 million.
LinkedIn also warned of an even more severe miss on first quarter profit margins. The company said it expects EBITDA of $106 million to $108 million, for an operating margin of 23%. Analysts tracked by First Call had been expecting EBITDA of $121 million, for a 26% margin.
In its earnings release, LinkedIn didn’t provide much insight on the reasons for this quarter’s new caution. Chief executive officer, Jeff Weiner, did say the company will be “investing significantly in a focused number of long-term initiatives that will allow us to realize our vision.”
Weiner will field questions from Wall Street analysts later this afternoon. They are likely to pounce on the toned-down outlook, demanding far more detail about any specific areas of slowdown and how the company plans to fix them.
Among the areas likely to get keen attention from analysts is LinkedIn’s membership growth rate. In a slide presentation that accompanies the earnings announcement, LinkedIn said it had 277 million members worldwide as of Dec. 31, up from 259 million Sept. 30. That represents a 6.9% quarter-to-quarter growth rate. Investors are likely to argue about whether that’s encouraging or not.
Updates to this story will be coming once the company’s conference call begins.
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