Despite beating 2Q forecasts, LinkedIn’s share prices fall

NEW YORK – It hasn’t been a good week for social media companies, not even for the usually reliable professional networking service LinkedIn Corp.

The company’s second-quarter results beat Wall Street’s expectations on all fronts, just as Facebook’s did on Wednesday and Twitter’s on Tuesday. But it’s the signs behind the headline numbers that seem to be worrying investors, enough for shares of all three companies to fall this week.

LinkedIn “did great this quarter,” said Gartner analyst Brian Blau, noting there is “some variability on their efforts quarter to quarter as they are in a very competitive market that is constantly innovating and changing.”

LinkedIn’s stock fell $17.44, or 7.7 percent, to $209.71 in after-hours trading.

Colin Gillis, an analyst at BGC Financial, said that while LinkedIn’s stock price is roughly unchanged since the start of the year, this masks the “the wild gyrations” that have taken place in its price. He said “investing in LinkedIn requires a tolerance to volatility, with the stock moving over 10 (percent) on each of the last four earnings.”

Blau, meanwhile, noted the “after-hours market this week has seen some erratic swings and I’m assuming that means there are some external factors in play here as well.”

LinkedIn’s adjusted earnings of 55 cents per share were well above the 30 cents that analysts polled by FactSet had expected for the April-June quarter. Revenue grew 33 percent to $712 million, also above analysts’ expectations of $680 million.