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Why MKM Is Weary Of LinkedIn

Why MKM Is Weary Of LinkedIn
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MKM Partners released a report Monday morning highlighting concerns over LinkedIn Corp (NYSE: LNKD), whom they consider the "de facto" in recruiting. Despite the potential in areas such as sales and learning, MKM focused on online jobs data, possible revenue shortfall, and the growing focus on GAAP vs. non-GAAP results.

Although it's not a direct revenue source for LinkedIn, overall hiring activity has been in decline since February, the worst month since January 2009. MKM argues these postings should be considered a check on demand "vibrancy."

Seeing further deterioration in second half of 2016, MKM thinks bear concerns that the potential hiring market is nowhere near the $12 billion "visible pipeline" cited by management.

Finally, LinkedIn is aggressive in terms of its use of stock based compensation expense and contributes to the large difference between EPS on a GAAP and non-GAAP basis.

Finalizing their note, MKM said although sentiment is heavily negative for the company, there are still long-term prospects for the company. MKM said to wait for clarity on hiring revenue exposed to macro factors or a boost in learning or sales before recommending LinkedIn.

Shares of LinkedIn were trading up ~$0.50 at $135.70 near the close of Monday's trading session.

Latest Ratings for LNKD

Jul 2016CitigroupMaintainsNeutral
Jun 2016RBC CapitalDowngradesOutperformSector Perform
Jun 2016UBSDowngradesBuyNeutral

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Posted-In: MKM PartnersAnalyst Color Analyst Ratings


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