LinkedIn is ‘trending in the wrong direction’

Linkedin ceo jeff weiner
LinkedIn CEO Jeff Weiner Justin Sullivan / Getty

One of LinkedIn’s holdout bullish analysts, Barclays, just downgraded the stock in a brutal research note.

Barclays’ Paul Vogel downgraded his rating for the professional social networking company to “equal weight” and slashed the price target to $130 from $205. LinkedIn’s average price target is $175, according to Yahoo Finance.

The stock was eviscerated in February after the company offered a disappointing revenue and profit forecast.

LinkedIn also killed a business unit called Lead Accelerator, a business-to-business ad network it got when it bought Bizo in 2014 for $175 million.

The stock plunged 44% on that day to the lowest levels in three years. It was trading above $200 in January.

Since then, analyst after analyst has taken a hard look at the company and decided that LinkedIn is either facing some serious internal problems or is simply no longer a high-growth company.

Barclays’ Vogel seems to think it’s a little of both. At one point Vogel compares LinkedIn to Zynga and Pandora in terms of how many of its freebie job-seeker users it can successfully convert to a premium account.

“If it is truly good at helping a user find a job, subscribers will churn faster the more successful the application becomes.”

And Vogel says that LinkedIn’s surprising decision to ditch Lead Accelerator makes him question other decisions such as buying Lynda for $1.5 billion last year.

“Misjudgment here calls into question some of the assumptions made when doing diligence on Lynda (which has admittedly performed very well to date), and even when examining Sales Navigator and their core Talent Solutions product.”

All told, Vogel thinks that LinkedIn is “trending in the wrong direction” and its lower growth and lower stock price are here to stay”

“Given the hiccups over the past year (they have missed 3 of the last 4 quarters) we believe investors are no longer willing to give them the benefit of the doubt … Growth, overall, will be slower than we had previously thought and we think the stock now needs to resettle into a newer paradigm around valuation and expectations.”

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