LinkedIn Corp (NYSE:LNKD) will release its quarterly report on Thursday, and the company’s growth prospects have continued to give investors justification for bidding up the stock to new heights. With the company still firmly in its high-growth phase, the question for shareholders is whether LinkedIn Corp (NYSE:LNKD) earnings can deliver on the huge promises that the stock’s rich valuation is making.
Given the mixed success from other social-media investments, LinkedIn Corp (NYSE:LNKD) has stood out with its early success. Yet even with a big first-mover advantage, can the company build on the foundation that its network effect has given it to find more ways to monetize its growing list of subscribers? Let’s take an early look at what’s been happening with LinkedIn over the past quarter and what we’re likely to see in its report.
Stats on LinkedIn
|Analyst EPS Estimate||$0.31|
|Change From Year-Ago EPS||94%|
|Revenue Estimate||$354.03 million|
|Change From Year-Ago Revenue||55%|
|Earnings Beats in Past 4 Quarters||3|
How far can LinkedIn earnings soar?
Analysts have gotten somewhat more optimistic about LinkedIn Corp (NYSE:LNKD) earnings prospects in recent months. They’ve kept their June-quarter estimates stable, but they’ve boosted their full-year 2013 calls by more than $0.10 per share. That has helped support the stock’s upward movement, with shares gaining another 8% since late April.
LinkedIn Corp (NYSE:LNKD) has done an excellent job of emerging on the social scene already fully profitable. With a combination of premium subscribers and business-generated revenue, LinkedIn has already achieved what some social competitors have never managed to accomplish: monetizing its network. The company has made it clear that finding new sources of revenue is an important part of its growth strategy, appeasing investors who are understandably nervous about the stock’s rich earnings multiple.
One such effort came last week, when LinkedIn launched a new sponsored updates feature. Facebook Inc (NASDAQ:FB) has had great success getting customers to buy into a similar feature, having posted more than 7.5 million promoted posts for business clients both large and small. But investors shouldn’t expect LinkedIn Corp (NYSE:LNKD)’s efforts to pay off immediately, as Facebook Inc (NASDAQ:FB) has gotten relatively small amounts of actual revenue from the initiative. Moreover, more ads can hurt the user experience, as Facebook Inc (NASDAQ:FB) has found out in recent results from the American Customer Satisfaction Index survey.