Both Twitter Inc (NYSE:TWTR) and LinkedIn Corp (NYSE:LNKD) dropped more than 20% of its stock value in the week that just ended. Both these social media giants reported a decent quarter earnings, but both Twitter Inc (NYSE:TWTR) and LinkedIn Corp (NYSE:LNKD) reported lower full year guidance, which disappointed many investors. But Stifel Research Senior Analyst, Scott Devitt feels that both companies are fundamentally different and he shared his idea about these companies on CNBC.
He pointed out that LinkedInc Corp (NYSE:LNKD) made a scintillating debut back in 2011, when the stock price doubled on the first trading day from IPO price of $45 to more than $90. He mentioned that LinkedIn is a very well respected franchise.
“It’s a very well respected franchise and with that I think we have had multiple accretions that has occurred because of the respect that the investment community has for the company. That went a little bit too far at a point in time where the company is going through a bit of a transition and that’s really nothing more than that. So, very strongly performing stock over multiple years that has gotten a little bit ahead of itself and these issues that were presented in the quarter are mostly transitory in nature as well as some miscommunication around the accounting over the recent acquisition of Indya.com,” Devitt said.
Many investors and analysts in the street believe that LinkedIn’s issue is only near term and they still feel that LinkedIn’s fundamental remains strong. They suggest that this stock could be bought and utilize the 20% drop at the moment.
Devitt said that he has got four buckets. First bucket is some weakness in LinkedIn’s talent business, which is due to their salesforce reorganization. Second bucket is some weakness in their marketing business, which is part of this broader problem in the social category, which Devitt thinks that LinkedIn has some leverage. Third bucket is the Indya.com accounting issue and fourth bucket is the social contingent. He said that when we add all the four buckets up, 20% drop might actually look like just a 7-8% drop.
But Devitt completely different about Twitter Inc (NYSE:TWTR). Twitter is a completely different company when compared to LinkedIn. He said that he doesn’t like the opportunity that Twitter has in the social media market. Devitt’s firm is pretty pessimistic about the growth opportunities for Twitter stock.
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