While this ad solution is still “in progress,” LinkedIn Corp (NYSE:LNKD) stock is still performing remarkably well. Last week, shares rallied after the company raised its revenue guidance for the year, saying it now expects to bring in between $1.455 billion and $1.475 billion, up from its May target of between $1.43 billion and $1.46 billion.
The company posted 2012 revenue of $972 million, and stated also that third-quarter revenue is estimated to be between $367 million and $373 million, which would be up 45% to 48% year over year.
The company has beat revenue forecasts every quarter since its 2011 initial public offering, and blown away earnings estimates in all but one quarter. So analysts are already projecting results for LinkedIn Corp (NYSE:LNKD) above the company’s guidance. The third-quarter revenue is forecast to be $383 million, while they’re expecting $1.5 billion for the full year.
In the second quarter, LinkedIn’s operating income was $44.5 million, up 146% from a year earlier, while revenue climbed 59% to $363.7 million. Both easily topped forecasts and the company’s earlier guidance. Shares of LinkedIn have rebounded since the May sell-off and were already up 85% on the year through Thursday’s close. Shares rose more than 9% in early trading Friday.
LinkedIn Corp (NYSE:LNKD)‘s Chief Financial Officer, Steve Sordello, has projected the company’s ad business will see more moderate growth in the near future due to lapsing one-time deals signed in Q2 last year. In other words, the company knows what it did wrong last quarter — and is fixing it.
In summary…
Social media stocks as a whole appear to be a mixed bag, but I believe investors can do well with LinkedIn. It has prepared for consistent profitability over time by continuing to expand a customer base through broader platforms, and by increasing revenue through a new advertising strategy.
On the other hand, it might be time to just cut one’s losses with Zynga Inc (NASDAQ:ZNGA) and get out. The company is still highly dependent on Facebook Inc (NASDAQ:FB), with 86% of the Zynga Inc (NASDAQ:ZNGA)‘s revenues coming from that site. Its so-called “freemium” business model, allowing users to play a game for free but pay for “extras,” has translated into only about 2% of user base being actual paying customers. This business model is not supportable, and in my opinion, Zynga Inc (NASDAQ:ZNGA) will continue to devalue.
The article Can These 3 Social Media Giants Boost Your Portfolio? originally appeared on Fool.com and is written by Bill Edson.
Bill Edson has no position in any stocks mentioned. The Motley Fool recommends Facebook and LinkedIn. The Motley Fool owns shares of Facebook and LinkedIn. Bill is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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