LinkedIn's Uninspiring Guidance Spooks Investors

LinkedIn's Uninspiring Guidance Spooks Investors

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Professional networker LinkedIn just put up a solid quarter, but it still wasn't enough for investors.

Revenue jumped 56% to $393 million, which translated into adjusted earnings per share of $0.39. Both the core recruiting and premium membership businesses grew over 60% in revenue, while the marketing solutions segment also posted healthy gains. Total registered members has also climbed nearly 40% to 259 million. However, guidance for next quarter rattled investors.

Fourth-quarter revenue is expected in the range of $415 million to $420 million, which is shy of the nearly $440 million in sales that the Street was expecting. That would still represent growth rates of upwards of 37% to 38%, which is hardly "bad." The guidance disappointed investors, especially as LinkedIn has more than doubled in value this year on future growth expectations. Like any growth stock trading at premium valuation multiples, shares are vulnerable to getting punished whenever growth prospects get called into question.

In this segment of Tech Teardown, Erin Kennedy discusses LinkedIn's latest earnings results with Evan Niu, CFA, our tech and telecom bureau chief.

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Erin Kennedy owns shares of Apple. Evan Niu, CFA, owns shares of Apple and LinkedIn. The Motley Fool recommends Apple, Facebook, and LinkedIn. The Motley Fool owns shares of Apple, Facebook, and LinkedIn. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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