With subscribers already crossing the 120 million mark and further expansion into big markets such as Japan, [1] Q3 2011 expectations are high from LinkedIn (NYSE:LNKD), keeping the stock close to $90. [2] This quarter is especially important for the company to deliver as the lock-up period for its +90 million shares is soon about to expire, [3] and any selling might send negative signals across the market. This is especially true given that LinkedIn’s valuation has always been debatable. LinkedIn competes against online job search and social networking companies such as Monster (NYSE:MWW), Facebook and Google (NASDAQ:GOOG).
See our complete stock analysis for LinkedIn’s stock here
Q3 Should See Healthy Expansion
LinkedIn so far has seemed on the right expansion track this quarter. In-roads into Japan provide the opportunity to expand in Asia’s most developed markets. Additionally, the company has increasingly become more visible in the public eye through continuous product upgrades, as well as its participation in relevant events such as the American Jobs Act. Given these developments, the company is expected to strongly build on its subscriber base this quarter as well.
Having said that, a strong Q3 is much needed for LinkedIn to keep its stock at present levels, given that the share “lock-up” period for its directors and executive officers is about to expire. This agreement restricts the sale, transfer or disposal for the requisite period, and any subsequent cashing out by these stakeholders can send out the message that LinkedIn might be over-valued.
We currently hold a price estimate of $34 for LinkedIn’s stock, which is well below the current market price. Refer to our article Why LinkedIn’s Fundamentals Don’t Support the Market Price on why we think the market is getting ahead of itself on the company.
Understand How a Company’s Products Impact its Stock Price at Trefis
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