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Groupon Inc (GRPN), Tesla Motors Inc (TSLA), and LinkedIn Corp (LNKD): A Trio That’s Moved Too Far Too Fast

To put that strength in perspective, LinkedIn Corp (NYSE:LNKD) earned 20% of revenue from subscriptions, 57% from job search tools, and just 23% from advertising in the first quarter. Nearly 85% of Facebook’s revenue was from advertising. There’s no question that LinkedIn has a great model and notable brand recognition. But it also has a trailing price to earnings ratio of around 500 and a forward P/E of around 90.

Those are heady numbers that require virtually everything to go right to justify. This is a good company that’s just too expensive right now. Investors should stay away.

Bad Votes

Wall Street usually gets pricing right over the long term, but that can require often painful short-term ups and downs. Groupon Inc (NASDAQ:GRPN)’s advance is based on rosy views of a business shift that is uncertain at best. Tesla Motors Inc (NASDAQ:TSLA) has great technology, but there’s still a long way to go before it’s mainstream enough to support the company’s price tag. LinkedIn Corp (NYSE:LNKD), meanwhile, has a good business model, but investors are stampeding in, sending the shares to likely unsustainable highs.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends LinkedIn and Tesla Motors (NASDAQ:TSLA) . The Motley Fool owns shares of LinkedIn and Tesla Motors.

The article A Trio That’s Moved Too Far Too Fast originally appeared on Fool.com.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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