LinkedIn plummets with the UK General Election partly to blame - apparently
- Summary:
- Acquisition costs, advertising shifts and the British election - all factors in sending LinkedIn's share price crashing - apparently.
Revenues for the March quarter were up 35% to $638 million while the net loss was $42.4m for the quarter, a threefold decline from a $13 million loss in the same period a year ago.
On a brighter note, cumulative numbers grew 23% to $364 million, unique visiting members grew 18% to an average of 97 million per month and member page views grew 30%, well ahead of unique member growth.
While the Lynda acquistion put a drag on numbers for the quarter, CEO Jeff Weiner insists it’s a transformative move for LinkedIn:
Lynda.com offers a high quality library of hundreds of thousands of professional training videos and full courses. Millions of people have used Lynda.com to easily and effectively acquire a skill needed to advance their careers. The ability to easily acquire skills through LinkedIn has implications across everything we do. When matched with our data about jobs and skills, we believe we can take a major step towards building the economic graph.
Eventually, Lynda.com training videos will be integrated into our platform and premium offerings where appropriate. For example, when doing profiles, seeking a job or reading content on the site. We also see a significant opportunity to leverage our other rich media service SlideShare. SlideShare now hosts more than 18 million presentations and videos making it one of the largest digital repositories of professional knowledge on the web. SlideShow users could be prompted to subscribe to a course on Lynda.com that is related to the subject they are learning more about on SlideShow.
On the advertising front, display saw a steeper deterioration in the first quarter. particularly in Europe, where an ongoing shift of programmatic advertising caused a drop in demand for traditional display formats.
CFO Steve Sordello said:
Display was weak across the globe but more so in Europe on a relative basis and again more in the UK interestingly enough.
Part of that is due to the fact a lot of agencies purchase out of the U.K. and they are moving more to performance-based advertising so that's an element of that.
Significantly, Q1 was the first quarter where traditional on site ads accounted for less than 50% of marketing solutions. This is a trend that LinkedIn expects to continue.
European weakness was further cited by Sordello as an issue during the quarter, to the degree of citing the UK General Election as being a factor, although he did not expand on this point:
Europe's been a little bit weaker on both the talent solutions and marketing solutions side. Particularly more in the UK, where there are some macro and election cycles and things happening.
My take
I’m struggling a bit to buy the UK General Election as a significant factor in LinkedIn’s performance issues, but clearly there’s some European stuff that needs addressing.
But on the back of Twitter and Yelp’s similar share dives this week, Wall Street seems to be falling out of love with social media to a certain degree. It’s quite possible of course that this is a reflection of overinflated expectations by investors, fuelled by vendor and analyst hype.
I was interested in Richard Holway’s take on this at TechMarketView:
The social media bubble has many similarities to the 1999/2000 dot.com bubble. Nobody doubts that social media is a mass market of huge potential. Just like with internet stocks, some will be fantastic winners – Facebook seems to be the clear winner at the moment – but others will be also rans and others will fail (remember Myspace?) Overall, the market has over valued most of them. But, again just like the dot.com days, you can have a great time as an investor until the music stops! Knowing when to go home is much more important than going to the dance in the first place.
Time will tell. But it’s not been a good quarter for the social giants overall.