LinkedIn Corp (NYSE:LNKD) is set to release its earnings numbers for the the first three months of 2014 this afternoon after the market closes on Wall Street. The company has been suffering under a weight of uncertainty in recent days after other web-based businesses produced less than stellar results in the first three months of the year.
Expectations hang on LinkedIn Corp
Analysts are expecting LinkedIn Corp (NYSE:LNKD) to show earnings per share of 34 cents for the first three months of 2014. The period, which the company recorded as its first quarter of fiscal 2014 is expected to have brought revenue of $466 million to the company. The company appears to be setting wild expectations for growth in each subsequent earnings release, and that trend has harmed it in the recent past.
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In the first quarter of 2013 earnings from LinkedIn Corp (NYSE:LNKD) set the company on a path toward substantial growth. The firm managed to earn 45 cents per share on revenue of $325 million in that quarter, ahead of the expectations of analysts on both counts. The firm actually managed to beat analyst expectations in every single quarter of fiscal 2014.
The firm’s incredible show of financial growth came at a price, however. As the company’s stock price became inflated through 2013 so did the worries of its shareholders. The company’s shares reached a peak of more than $250 a piece in September of 2013. Since then returns have been pretty disappointing and the company’s shares remain valued at an incredible level.
Shares in LinkedIn Corp (NYSE:LNKD) trade at more than 800 times the profit the company brought in in 2013. The firm’s investors are expecting huge expansion in earnings in the year to come and the firm’s shares could trade wildly if those expectations are not met in full, or even exceeded. LinkedIn shareholders are in a precarious position in a business nobody knows all that much about.
LinkedIn in the land of social networks
It has come time for Facebook Inc (NASDAQ:FB) to relinquish control of the word social networks. Several different platforms have eroded part of that company’s business, but have left it unscathed for the most part. Facebook may not command as much attention as every other social network combined, but it is still a central part of the electronic lives of most people.
LinkedIn Corp (NYSE:LNKD) was the firs social network to escape from Facebook’s shadow, and the company is continuing to demonstrate that difference. People use LinkedIn as an online resume rather than a messaging service. The pay a premium in order to access to the best features, and they expect the site to take control of a tiny aspect of who they are.
A lot of time has been spent by LinkedIn Corp (NYSE:LNKD) management to ensure that Facebook cannot replicate what it does for its customers. It has built itself a solid moat and users are now flocking to pay a premium for its services. The firm has established itself as one in a network of social networks, unfortunately its stock price has ballooned much more quickly than its earnings. That is likely a problem going forward.