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Chowdhry: 'Challenges' Remain At LinkedIn

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In an email sent to investors on Friday, Trip Chowdhry of Global Equities Research assures challenges remain at LinkedIn Corp (NYSE: LNKD), following its earnings beat on Thursday evening.

The tech company reported earnings of $0.55 per share on revenue of $711.74 million, doubling its guidance, which called for earnings of $0.28 per share on sales of $672.5 million. The results also beat the Street’s consensus estimate, which pointed towards earnings of $0.32 per share on sales of $681.56 million.

After the report, Chowdhry answered a couple of questions that shed light on the results.

The Fundamental Problem Of Ad-Supported Business

Chowdhry thinks the problem With Ad-supported business -- including Google Inc (NASDAQ: GOOG) (NASDAQ: GOOGL), Yahoo! Inc. (NASDAQ: YHOO), LinkedIn, Facebook Inc (NASDAQ: FB) and Twitter Inc (NYSE: TWTR) -- is relatively straightforward. “[E]ngineers from these vendors," he explains, "have joined Advertising companies and Ad-Agencies, and since they are technically prudent, they are hitting hard on...Algorithm manipulation and Ad Monetization practices."

Advertisers on Facebook will now pay only for clicks on Ads, not for shares or Likes like they used to. This, Chowdhry added, limits revenue acceleration at the company.

Related Link: Why Wall Street Isn't Freaking Out About LinkedIn's Earnings

In the past, these tech giants benefited from the “technical ignorance” of advertisers, he said, but it's not the case any longer.

Global Equities Research’s View On Lynda.com

Regarding Lynda.com, Chowdhry says his firm has not come across anyone using it yet. However, the analysts will continue to monitor the situation and provide updates.

Latest Ratings for LNKD

DateFirmActionFromTo
Jul 2016CitigroupMaintainsNeutral
Jun 2016RBC CapitalDowngradesOutperformSector Perform
Jun 2016UBSDowngradesBuyNeutral

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