LinkedIn Doesn’t Find A Fan In At Least One Research Firm (LNKD, RENN, SINA, UNTD, QPSA)
Shares of LinkedIn (LNKD), the social networking site for professionals, are off 1% after Capstone Investments initiated coverage of the stock with a “sell” rating and a $45 price target, which is more than 50% below where the shares currently trade. In an 18-page research note, Capstone accuses LinkedIn of creative accounting and poor corporate governance, among other issues.
The news doesn’t appear to be having much of an impact on the Social Networking Stocks Index, which is flat on the day. Capstone also mentions LinkedIn may have a higher fixed cost business and lower-than-advertised user base. Add to that, the research firm sees LinkedIn’s valuation as being on the frothy side while noting the $45 price target could prove to be too optimistic as the company stumbles to execute its business plan and the lockup period for early investors and insiders expires in November.
Capstone also notes that LinkedIn’s fastest-growing segment, hiring solutions, may not ramp up to the expectations that investors have for the business, further pressuring the stock.
Looking at other Index members, Renren (RENN), the Facebook of China, is surging 8%, adding to a 32% gain the past week. SINA (SINA) is up half of a percent while United Online (UNTD) is higher by 2%. Quepasa (QPSA) is slumping 3%.
Investors can track the Social Networking Stocks Index for performance trends and a suite of other metrics at tickerspy.com.
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Reflections on the LinkedIn IPO and the Usability of LinkedIn Itself (GreenLightAdvisor Views, 5/20/11)
Reflections on the LinkedIn IPO and the Usability of LinkedIn Itself (Phil's Favorites, 5/20/11)
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