Social Market Analytics Looks at LinkedIn

This week, Social Market Analytics (SMA) looks at LinkedIn Corporation LNKD, the operator of a proprietary networking platform allowing its members to create and share their professional identity; build and engage professional networks; access shared knowledge and interests; and find business and career opportunities.  The week of July 30 helped to establish LinkedIn as a standout from increasing investor skepticism for social media stocks in the wake of the disappointing performance of Facebook’s shares.  Shares in LinkedIn rallied as the company reported much stronger than expected revenues and raised revenue guidance for the remainder of fiscal 2012.  During the week, LinkedIn appeared on SMA’s morning Flash Report, which identifies stocks, in the pre-market, with extreme sentiment levels that are likely to trade with high activity during the upcoming session. On the morning of August 3, our analytics engine identified LinkedIn as one of two stocks with extreme positive sentiment from the universe of stocks tracked by SMA.  As the week evolved, SMA’s sentiment metrics provided early indication of positive price trends for LinkedIn and then confirmation of continued positive sentiment as the market integrated the company’s Q2 results and optimistic fiscal guidance.

SMA’s S-Score for LNKD entered a pronounced positive trend beginning on July 30.  In the pre-market of August 2, LinkedIn’s S-Score stood at 0.79, a notable swing into positive territory from an average value of -0.63 during the previous 10 days.  The behavior of SMA’s S-Score measures market trading sentiment and can provide actionable signals for upcoming price movement.  During the week, market sentiment for most social media stocks persisted at negative levels as Facebook shares continued to sell off.  LinkedIn closed trading on August 2 at $93.51, a decline of 2.2 percent but with sentiment trends contrary for its industry sector.  LinkedIn’s change in S-Score trend accelerated in the pre-market of August 3 posting a large increase to 4.17 (Extreme Positive), coincident with a 5-fold increase in its S-Volume metric indicating unusually high social media activity for the stock.  LinkedIn gapped up strong at the open to $105.66 and continued to trend higher in the afternoon session to close at $108.50, a gain of 16.04 percent for the day and at a net gain of 4.9 percent for the week.  On Saturday, August 4, positive levels of sentiment and high levels of social media activity persisted, but started to show a decline, which is typical of market sentiment behavior at the start of a quiet weekend, ahead of a new week of trading.

Social Media data are noisy and complex.  A single metric is insufficient to understand sentiment behavior over time.  Our S-Factors are a family of metrics, including volatility, trend and volume measures, designed to provide a complete view of the social media signature for each security tracked in SMA’s database.  SMA's processing engine continuously updates our S-Factors, capturing overnight and pre-market sentiment activities. Clients receive sentiment reports, prior to the U.S. market open, and intra-day sentiment estimatesfor tracked stocks, on-demand.   We invite the reader to visit our website; investigate our market sentiment metrics for LinkedIn, other stocks, industry sectors, and market indices; participate in our FAQ forum; and sign up for our Flash Report and Newsletter.