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LinkedIn Corp (LNKD), And Some Twitter Thoughts

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The Bureau of Labor Statistics issued a decent employment report for the month of April: The economy added 165,000 jobs, and the unemployment rate dipped to 7.5%. Apparently, that hadn’t been discounted in stocks’ recent two-day run-up, as the markets are showing solid gains this morning, with the S&P 500 and the narrower, price-weighted Dow Jones Industrial Average up 1% and 0.95%, respectively, at 10:05 a.m. EDT.

The big winners
There are winners and losers among social-networking companies, and the gulf between them is vast — in some cases, it can mean the difference between wild success and extinction. Today, I’m talking about the winners.

Professional networking website LinkedIn Corp (NYSE:LNKD) reported its first-quarter results yesterday afternoon, blowing past the consensus estimate with earnings per share of $0.45 versus a forecast of $0.30. However, Wall Street’s voracious expectations machine wasn’t satisfied: The shares are down 8.3%. The reason? Putatively, it’s the fact that the company issued revenue guidance for the current quarter that fell below analysts’ estimate, although the midpoint of LinkedIn’s guidance range was just 4% below the consensus figure.

LinkedIn Inc.One headline I saw this morning at the top of Yahoo! Finance summed up the fast-money crowd’s disappointment: “LinkedIn’s Weak Link.” That may be accurate from a trader’s perspective, but on a fundamental basis, this company looks to me like it is firing on all cylinders; for example, LinkedIn Corp (NYSE:LNKD) raised revenue guidance for 2013 to between $1.43 billion and $1.46 billion.

Image: LinkedIn Corp (NYSE:LNKD)

It’s difficult to argue for the purchase of the shares based on any traditional valuation metric, but, whether or not the shares are a good buy at current prices, this is clearly a business that is creating tremendous long-term value.

Speaking of winners in social networking, Twitter is the biggest name that has yet to go public, but its days as a private company may be numbered. In hiring Morgan Stanley investment banker Cynthia Gaylor as head of corporate development, the microblogging platform is sending an unmistakable signal that it is gearing up to join the public markets. At Morgan Stanley, Gaylor has worked on transactions on behalf of Facebook, LinkedIn Corp (NYSE:LNKD), and Zynga. Let’s hope a Twitter IPO goes more smoothly than Facebook’s, which ended up as a reputational black eye for its lead underwriter — Morgan Stanley.

Finally, Twitter got a terrific plug when the Oracle of Omaha himself, Berkshire Hathaway CEO Warren Buffett, jumped into the conversation with his own account. As he put it in his first tweet:

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