MOUNTAIN VIEW -- LinkedIn stock roared to record prices Friday, rising more than 20 percent and breaking the $150 level for the first time after the professional networking company destroyed expectations by recording its first quarter with more than $300 million in revenue.
Shares moved as high as $151.89 Friday before closing at $150.48, a gain of $26.39, or 21.3 percent, with both prices representing new records for LinkedIn stock.
The Mountain View company has been the most successful social-media stock on the market since its initial public offering at $45 a share in May 2011. Investors and analysts have been wowed by the company's continuing growth, which has allowed it to beat analyst projections for quarterly revenues in every single quarter since the IPO.
The final three months of 2012 was no different, as LinkedIn blew away forecasts for revenue and profit. LinkedIn reported revenue of $303.6 million, 81 percent higher than the same quarter in 2012, with profit of 35 cents a share. Analysts on average expected the company to report profit of 19 cents a share on revenue of $280 million, according to Thomson Reuters.
For the calendar year, LinkedIn barely missed topping $1 billion in revenue at $972.3 million, 86 percent higher than the 2011 total of $522.2 million. Excluding certain items, the company brought in 89 cents a share on the year, more than doubling its 2011 profit of 35 cents a share.
"2012 was a transformative
Even the company's projections for the current quarter were stronger than expected, as LinkedIn forecast first-quarter revenue of $305 million to $310 million; analysts expected $301 million.
"You can pick out a lot of things that were great, from customer adds to accelerating revenue to growth in international," Needham analyst Kerry Rice told Reuters on Thursday. "On top of that, guidance is pretty outstanding. And from a historical perspective, they'll likely beat those numbers, too."
Analysts responded Friday morning by increasing their price targets for LinkedIn. Bank of America, Citigroup, JPMorgan, Wedbush Securities, Cantor Fitzgerald, Evercore Partners and Piper Jaffray were among the firms that pushed higher their estimates for the best price at which to sell the stock.
Some of those price targets are still lower than the stock's skyrocketing price Friday, however. Cantor Fitzgerald analysts raised their target from $125 to $145, Wedbush pushed its target from $106 to $140, and Northland Capital increased its target from $125 to $145. MarketWatch, which tracks 30 analysts who cover LinkedIn, reported that the average price target on the stock increased from $137.50 to $150, which puts it right in line with Friday's closing price.
While Rice told MarketWatch on Friday that the valuation of LinkedIn "remains challenging to justify" because of a very high price-to-earnings ratio, Evercore Partners analyst Ken Sena wrote in a note that "despite the earnings multiple, we view valuation as defensible given its explosive growth within huge addressable markets, major competitive barriers, and attractive gross margin leverage." Sena increased his price target from $140 to $160.
Wall Street enjoyed strong positive movement overall Friday, and technology stocks were especially hot, as the tech-heavy Nasdaq had the largest gains of the three major stock indexes.
Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.