3 reasons why LinkedIn tanked

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Yesterday, LinkedIn saw it’s largest drop in share price since it’s IPO in May 2011. So what happened?

Let’s park for now the continued threat of a tech bubble ready to burst, and the impact of a Chinese slowdown, and look closer at LinkedIn itself:

  1. A poor earnings call – It’s the season for investor updates,  and LinkedIn’s conf call falls between positive Google and Facebook results, and a nervous expectation for Twitter’s, next week, so they needed to be solid. Ultimately they beat expectations on Q4 2015, but what worried investors was the grim outlook for the start of 2016.
  2. Killing off it’s ad network – As part of the Thursday night call, the company confirmed it was closing down the ad network it launched as recently as 2014, Lead Accelerator. CLinkedIn Lead Accelerator scrappedFO, Steve Sordello stated “This is a long-term strategic decision that impacts our short-term revenue growth. When excluding the past and future impact from Bizo, we expect our Marketing Solutions business to accelerate in 2016.”
    It seems investors did not agree with this decision, which appears to remove an effective revenue stream.
  3. Management bullsh*t – CEO Jeff Weiner summed up his prepared remarks with the following statement: “Our strategy in 2016 will increasingly focus on a narrower set of high value, high impact initiatives with the goal of strengthening and driving leverage across our entire portfolio of businesses. Our roadmap will be supported by greater emphasis on simplicity, prioritization, and ultimate ROI and investment impact.” Could a CEO jam any more buzzwords into one paragraph?
    IMO, Statements like this do nothing to inspire investors, customers or employees.

Hopefully, the Twitter earnings call on Wednesday receives a more positive response.

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