LinkedIn Corp (LNKD) Q3 Preview: Growth Is Good, But Risk Abounds

LinkedIn Corp (NYSE:LNKD) will release its earnings numbers for the three months through September this afternoon after the market closes on Wall Street. The company is expected to show strong growth in the report as it attempts to monetize its enterprise-facing social network.

LinkedIn Corp (LNKD) Q3 Preview: Growth Is Good, But Risk Abounds

In the run-up to the release of today’s earnings report, analysts following LinkedIn Corp (NYSE:LNKD) were looking for earnings of 31 cents per share for the company’s third quarter of 2013. Revenue for the three months is expected to come in at $385 million. In the same period of last year the company recorded earnings of 22 cents per share on revenue totaling $252 million.

LinkedIn earnings

Massive growth is expected from LinkedIn Corp (NASDAQ:LNKD) for many years to come in order to justify its massive stock valuation. The company is expected to show earnings of $1.55 for the full year 2013, after reporting $0.89 cents for the full year 2012. Revenue is expected to increase to $1.5 billion for the full year 2013. In 2012 the social network recorded revenue of $972 million.

LinkedIn Corp (NYSE:LNKD) pulls in revenue from three major business segments. The company’s core is its headhunting and recruiting service that it offers to corporate clients. That business is still the strongest performing at the company and it beats out the firm’s advertising and user subscriptions for the top spot.

In advertising, LinkedIn Corp (NYSE:LNKD) has announced some new updates to its offerings. The firm now offers Facebook Inc (NASDAQ:FB) style in-feed advertisements, and investors are hoping that the product can see the same success it did at the world’s largest social network. The advertising is particularly focused on mobile, a market that LinkedIn is trying to get into.

LinkedIn valuation

LinkedIn Corp (NYSE:LNKD) is one of the many tech companies on today’s market running on little more than expectations of future growth. The company’s stock has more than doubled so far in 2013. The company is now trading at close to 700 times 2012 earnings. LinkedIn is going to grow in the coming earnings report, but it’s unclear what investors really expect from the company.

If LinkedIn Corp (NYSE:LNKD) can manage to keep up with whatever expectations the market has put on it, it will have a bright future. At 700 times earnings, the company’s stock is a risky bet.