LinkedIn 1Q15 Revenues and Earnings Below Expectations

LinkedIn expects lower revenues, earnings per share for 2015

LinkedIn (LNKD) announced its 1Q15 earnings on April 30, in which it sharply lowered its outlook for 2015. The company now expects EPS (earnings per share) of $1.90 per share for 2015 against its previous expectations of $2.95 per share. LinkedIn also expects revenues of $2.90 billion against its prior expectations of $2.93 billion–$2.95 billion, as the chart below shows.

Investors were clearly unhappy with the weak outlook that LinkedIn provided, as the company’s stock plunged by 20% after the earnings were announced.

LinkedIn 1Q15 Revenues and Earnings Below Expectations

Display ad market is becoming competitive

The slower display ad spending growth and the strong US dollar (UUP) were the primary reasons cited by LinkedIn for its weak outlook. Even Twitter (TWTR), which announced its 1Q15 earnings last week, was also forced to lower its guidance for the rest of the year. Twitter’s stock was down 25% after it revealed its revenue growth slowdown concerns.

Facebook (FB) announced mixed 1Q15 earnings but despite the company’s slowing revenue growth, Facebook stock didn’t take the same kind of beating as LinkedIn and Twitter. This indicates that competition in the online advertising market is increasing.

Google (GOOG) (GOOGL) is the exception in the online ad industry, which reported better-than-expected earnings despite currency issues.