Value investors have waited for this to happen for a
This tech company hasn't garnered the media attention of
) but on Friday, CNBC's Jim Cramer came out singing its praises.
Just because Cramer likes it doesn't mean you should, but this
stock may have given value investors exactly what they wanted-an
That company is LinkedIn (NASDAQ:
). Even after Friday's double digit fall, the stock is up 53
percent this year and has quadrupled since its 2011 IPO.
Then came Thursday after the bell. LinkedIn announced earnings
that were well above consensus estimates but spooked investors
with its Q2 guidance. Looking to Q2, the company projected
revenue of $342 to $347 million versus consensus of $359.24
million. This sent the stock down 13 percent on Friday to close
Slow Mobile Adaptation
Does this story sound familiar? Social media is all about
mobile and companies slow to embrace it find themselves wondering
what went wrong. It happened with Facebook and now, LinkedIn.
According to Aaron Kessler, analyst at Raymond James &
Associates Inc. and reported by
, "It could be the desktop-to-mobile shift, and they don't have
as much advertising on mobile."
But Cramer thinks the 13 percent drop was an overreaction. He
said, "They are under-promising and they will over-deliver.
I want to buy LinkedIn
." Cramer said that the Q2 guidance and its EBITDA estimates were
the only two negatives in an otherwise bullish report.
""This is the only negative. Page after page after page, its
premium model is terrific. I refuse to be tied down by that
line," Cramer said. "I like LinkedIn."
What Does the Chart Say?
Can a stock drop 13 percent in one day with very little
technical damage? Yes it can, and LinkedIn is proof. Although it
broke through what some technicians might call a weak level of
support around $190, the drop took it down to within one dollar
of its 50 day moving average. The fact that this level held is a
victory for a stock trading at 502 times earnings. Not only did
the 50 day hold, so did the uptrend.
The next couple of trading days will be pivotal for the stock.
If the 50 day fails on volume, the thesis could change but if it
holds these levels, LinkedIn could be the value investor's dream
Of course, don't take our word for it. Analyze the earnings
report, listen to the conference call, and look at the chart but
definitely keep an eye on this name.
Disclosure: At the time of this writing, Tim Parker had no
position in the securities mentioned but may in the next couple
of trading days.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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