For Analysts, Loving LinkedIn Was Wrong

It’s not often Wall Street says “I’m sorry.” But after LinkedIn reported its earnings on Feb. 4, about a dozen financial analysts with varying strategies and sensibilities issued mea culpas. Some had rated LinkedIn a buy a few hours before its downgraded forecast. They watched in horror as its stock fell more than 40 percent, bottoming out below $104 on Feb. 5. Some put it more simply than others. “We were wrong,” SunTrust Robinson Humphrey analyst Bob Peck wrote in a Feb. 5 note downgrading the stock to “neutral.” (He’d praised LinkedIn’s odds of continued progress two weeks earlier.) Mizuho Securities lamented the company’s “significantly slower” growth prospects, while James Cakmak at Monness Crespi Hardt said he was no longer sure even LinkedIn’s slower growth would be sustainable.

LinkedIn took a beating even though its earnings report was consistent with recent performance. As usual, it beat earnings expectations, then issued a lower-than-expected sales forecast for the year. It delivered a similarly disappointing projection in last year’s second quarter, at which point its stock dipped 19 percent. But now Wall Street is more skeptical of the tech stocks it once assumed would grow forever.