Takeaway: Tracker suggests stable, but slightly waning selling environment. We expect 2Q/3Q upside, but asymmetric setup, so remain on the sidelines.

KEY POINTS 

  1. WANING, BUT STABLE: At face value the tracker looks really good, but April is seasonally the strongest month in 1H for hiring intensity, making the q/q comparison less effective.  That said, we’re deferring to the y/y trend, which is showing a mild deceleration vs. 1Q16, suggesting that the selling environment remains stable, but losing steam in April.  As a reminder, our LNKD Hiring Solutions TAM analysis suggests that the bulk of that opportunity is in the upsell (ARPA) vs. new account volume.  Note that LNKD stopped reporting its Talent/Hiring Solutions customer counts, so we will not be able to calculate its ARPA anymore, but we'll continue to provide tracker updates.
  2. ASYMMETRIC SETUP: LNKD’s stock has been grinding higher following uneventual trading off its 1Q16 release; some of that may just beta, but optimism is still building in the name.  We suspect that buyside consensus for LNKD is that its disaster 2016 guidance release was egregiously sandbagged, making it tougher to play LNKD on the long side since the expectation may be for recurring beats/raises through 2016.  As we’ve seen in the past, a beat/raise isn’t always enough to drive the stock higher, especially if there is any sort of wrinkle in the numbers and/or mgmt commentary (e.g. 2Q15).  So even though we currently see upside to the 2Q print/3Q guidance (see table below), we don't expect the street to chase it unless the print/call is largely flawless; but even then the upside is debatable (e.g. 1Q16).  But on the other end, if mgmt introduces any new red flags, the stock could easily give up its recent gains.  We remain on the sidelines for now.

See the notes below for additional detail on LNKD's last two releases.  Let us know if you would like to discuss further.  

Hesham Shaaban, CFA
Managing Director


@HedgeyeInternet 

LNKD | Tracker Update (Hiring Solutions) - LNKD   ARPA vs. JOLTS 2Q16 Apr v2

LNKD | Tracker Update (Hiring Solutions) - LNKD   y y JOLTS 2Q16 Apr

LNKD | Tracker Update (Hiring Solutions) - LNKD   TS Scen 2Q16   3Q16

LNKD | Good Print, No Chase (1Q16)
04/29/16 10:34 AM EDT
[click here]

LNKD: Guidance = Recession
02/05/16 09:50 AM EST
[click here]