LinkedIn Corp (LNKD): The Simple Reason Why Jim Cramer’s Bullish

Page 1 of 2

LinkedIn  Corp (NYSE:LNKD) has been a darling on the markets ever since its IPO a couple years’ back, and it has beaten all analysts’ expectations every single quarter, including the most recent one. However, during Friday’s trading, the stock has gotten battered and beaten for one of the few times since the IPO, and the suggestion is that the company game weak guidance on the current quarter, which was weaker than some pessimistic analysts might have forecast.

LinkedIn Corp (NYSE:LNKD)

The news overall wasn’t just good for LinkedIn Corp (NYSE:LNKD), they would be considered blockbuster. Earnings by the company quadrupled over the same period a year ago, and overall revenue doubled. So why is the stock down 10 percent on the basis of hose news?

And if the entire market is selling on LinkedIn Corp (NYSE:LNKD), why is CNBC’s Jim Cramer so darn bullish in the wake of all the red numbers on the board?

Simple overreaction, he said Friday.

“I have here, in my hand, a 15-page brief in favor of a fabulous forward look for LinkedIn,” Cramer said, “and there are two lines, two lines in this conference call that have destroyed this stock today. And I say that they (LinkedIn executives) are doing ‘UPOD’; This is UPOD.

They are underpromising, and they will over-deliver. I want to buy LinkedIn. … This is the only negative. Page after page after page (of good). I refuse to be tied down by that one line. I like LinkedIn.”

So there you go. It’s important to point out that from a valuation standpoint, LinkedIn is actually around one-fifth as expensive as social media rival Facebook Inc (NASDAQ:FB), and while they operate in different spectrums of the digital world–the former’s career-oriented while Facebook is more socially minded–there’s simply no explanation why investors should favor FB so much.

A valuation discount like LinkedIn Corp (NYSE:LNKD) currently has against Facebook would be warranted, if, for example, it had a higher dependency on advertising dollars to meet its total revenue expectations, but in fact, the opposite is true. It’s estimated that about 85% of Facebook’s revenues come from ads, while 30% of LinkedIn’s are derived from the medium.

Does this make logical sense? No, so it’s easy to agree with Cramer here. Mr. Market should be a buyer, and retail investors shouldn’t let short-term fear drive their behavior.

Are you a “one-liner” when it comes to LinkedIn Corp (NYSE:LNKD), or are you a big-picture investor who sees the growth in the company and the stock? Are you a buyer or seller of LinkedIn? Give us your thoughts in the comments section below.

See Cramer’s comments in video form on the following page:

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Top Reasons For Getting Fired

The 3 Best States to Start an LLC

10 Jobs That Allow You to Travel

7 High-Paying Jobs You Can Do From Home

12 Best Cities to Shop in USA

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!