LNKD seems to be at a decision point now and so does AAPL. The two could very well put up impressive numbers, but the market seems to be entering a period where that is just not enough. If AAPL is getting discounted for mediocre earning, shouldn’t LNKD be sold too? This may be the case.
From the macroeconomic prospective, the Citi US Macro Index has recently turned negative. This economic indicator has been a solid ‘tell’ for investors when trying to time the market. Should the economy start to contract, stocks like LNKD present an excellent selling opportunity…especially considering the stock was under $80 just about one year ago. There are not many reasons to be long 700+ multiple names when stocks like AAPL are getting wacked to back below market multiples.
Consumers will naturally flock to the cheapest alternative at a given price. We are currently seeing this in AAPL, for consumption has shifted to similarly (sometimes cheaper) priced technology. Should LNKD start to charge for more items, the stock could take a hit based on lower performance metrics and that will be the start of its massive multiple unravel; similar to the NFLX top at $300. Existing sties may pick up the slack when they smell blood in the water and start to create a similar platform for professional networking. First to a market does not always mean instantaneous success
Remember, stocks take the escalator up, but the elevator down to reality. Just because a stock or company has a massive user base does not mean that it is of value – think AAPL, GRPN and ZNGA. Once these stories break, it will become exponentially harder to find ‘value.’ Retail investors and Wall Street alike love to pick bottoms. For example, AAPL seems to be a ‘value’ stock at $700, $600, and now sub $500. The future looks bright for LNKD and AAPL, but that does not mean the stock is a ‘perma-buy’ regardless of price.