LinkedIn stock just fell off a cliff
This story has been updated.
LinkedIn's executives may want to add some stress management experts to their professional networks on LinkedIn.
Shares of LinkedIn collapsed as much as 40% in early trading Friday following a disappointing earnings report the night before, effectively shaving off $10 billion from the company's market cap overnight.
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The professional social networking company posted a surprise loss of $8.4 million in the holiday quarter as it continues to invest in new products and services. LinkedIn also forecasted weaker sales for the upcoming quarter and fiscal year ahead than Wall Street analysts had expected.
Like other businesses this cycle, LinkedIn CFO Steve Sordello laid some of the blame for its lower forecast on "current global economic conditions."
To make matters worse, LinkedIn showed a slowdown in revenue from its premium subscription business -- the one you're always getting e-mails about to join -- and sales from its tools for recruiters.
The fierce selloff of LinkedIn stock is the latest reminder that Wall Street investors no longer have much tolerance for even the slightest signs of weakness from high-valued Internet and technology companies. The stock market has been a non-stop bloodbath this year; patience and optimism are in short supply.
"The company has historically been quite conservative with its guidance, and almost routinely delivers upside to guidance and consensus," Michael Pachter, an analyst with Wedbush, wrote in an investor note obtained by Mashable. "On the other hand, recent market volatility suggests that investors lack the patience to play the guidance game and wait for companies to exceed lowballed guidance."
The data in the earnings report wasn't all bad: Its membership base topped 400 million in the quarter and usage and engagement on smartphones and tablets continues to grow thanks to a redesign of its flagship application. But that wasn't enough.
LinkedIn isn't the first technology company to suffer Wall Street's wrath in this current earnings cycle.
Match Group, the newly public company that owns a suite of dating services including Tinder, fell by double-digit percentages this week after missing Wall Street's revenue estimates for the holiday quarter. GoPro, the adventure camera maker, dove off a cliff this week, too, after posting a quarterly loss.
Facebook, by comparison, reported flawless earnings last week and quickly overtook Exxon to become the fourth most valuable company in the world by market value.
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The message is clear: If you don't meet Wall Street's expectations right now, you're in for a world of hurt.
That's a concern for struggling public companies like Twitter, which is scheduled to report its latest quarterly results next week, as well as for the dozens of billion-dollar private startups that might now be too scared to go public later this year.
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Seth Fiegerman was a Senior Business Reporter at Mashable, where he covered startups, marketing and the latest consumer tech trends. He joined Mashable in August 2012 and is based in New York.Before joining Mashable, Seth covered all things Apple as a reporter at Silicon Alley Insider, the tech section of Business Insider. He has also worked as a staff writer at TheStreet.com and as an editor at Playboy Magazine. His work has appeared in Newsweek, NPR, Kiplinger, Portfolio and The Huffington Post.Seth received his Bachelor of Arts from New York University, where he majored in journalism and philosophy.In his spare time, Seth enjoys bike riding around Brooklyn and writing really bad folk songs.
