LinkedIn stock soars 22% to record high of $150

JP Morgan raises prices target to $163 from $142

Wow, does LinkedIn have a lot to be happy about today!

The social network for professionals easily beat analyst expectations in its Q4 2012 earnings report, released after the close Thursday.

Shares sprinted out of the gate and ended up 22% to $150 by the close Friday. The price is by far the highest level the stock has traded since LinkedIn went public in May 2011. 

The closest LinkedIn has ever come to the same price was when the stock went up to $127.45 on January 28.

In a conference call after the report, CEO Jeff Weiner credited the company's growth to the new products delivered by LinkedIn during the year, which came from an accelerated product schedule. This was reiterated by JP Morgan analyst Doug Anmuth, who raised the price target of the stock from $142 to $163.

"Rapid product innovation and high engagement drove upside to growth in all segments, and LinkedIn passed the 200M+ members milestone in the quarter. We expect shares to respond favorably to the better than expected 4Q results and solid 2013 outlook. We continue to believe LinkedIn is operating extremely well and has significant room for growth ahead driven by the secular shift toward enterprise hiring, expanded field sales efforts, and product innovation," Anmuth wrote.

Anmuth specifically cited what he liked regarding LinkedIn's report:

• Over 2,400 corporate customers were added in the quarter
• The average revenue per enterprise customer increased due to expanded recruitment product sales
• Average CPMs rose due to strong Marketing field sales, while the online channel also delivered solid growth
• Premium sales were 13% higher than he had estimated and that the company is seeing increased traction of Sales Navigator
• EBITDA margin grew 369bps sequentially to 25.9%, driven by gross margins and leverage in R&D and G&A.

JP Morgan raised its projected revenue for the first quarter of 2013 from $206.5 million to $308.5 million. Full year revenue projections were raised from $1.412 billion to $1.441 billion.

LinkedIn's spectacular 2012

LinkedIn managed to beat Wall Street expectations in every quarter of 2012, and saw its stock rise accordingly.

In Q1, LinkedIn reported a profit of $5 million, or 4 cents a share, on revenue that doubled to $188.5 million. On an adjusted basis, earnings came in at 15 cents a share, well above the consensus outlook of 9 cents and revenue of $178.8 million. 

In its second quarter earnings report, LinkedIn's revenue grew 89% to $228.2 million, exceeding consensus estimates of $216 million by 6%, and even besting its own range between $210 million and $215 million. At the same time, LinkedIn said it earned 3 cents a share, or 16 cents on an adjusted basis, which only met analysts' consensus estimates of 16 cents a share. 

In the third quarter, LinkedIn once again beat expectations with non-GAAP earnings per share of 22 cents a share and $252 million in revenue. The social network was expected to post earnings of 11 cents per share and $243.9 million in revenue.

At the beginning of the year LinkedIn's stock was trading at $64.12 a share. By the end of the year, it was $114.82, a rise of more than 44%. And the stock has only continued to rise from there.

Fourth quarter numbers

LinkedIn posted non-GAAP earnings per share of 35 cents on revenue of $303.6 million, up 81% from $167.7 million in the year-ago period, and well above the consensus estimates compiled by Thomson Reuters of 19 cents a share on revenue of $279.5 million. 

Net income for the fourth quarter was $11.5 million, up 40%  from net income of $6.9 million for the fourth quarter of 2011. Non-GAAP net income for the fourth quarter was $40.2 million, 65% higher than the $13.3 million it posted for the fourth quarter of 2011.

Adjusted EBITDA for the fourth quarter was $78.6 million, or 26% of revenue, compared to $34.4 million for the fourth quarter of 2011, or 21% of revenue.

For the full year 2012, revenue increased 86% to $972.3 million from $522.2 million.

For the first quarter of 2013, LinkedIn is projecting revenue between $305 million and $310 million. Adjusted EBITDA is expected to range between $67 million and $69 million. The company expects depreciation and amortization in the range of $25 million to $27 million, and stock-based compensation in the range of $32 million to $34 million.

For the full year 2013, revenue is expected to range between $1.41 billion and $1.44 billion. Adjusted EBITDA is expected to range between $315 million and $330 million. The company expects depreciation and amortization in the range of $130 million to $135 million, and stock-based compensation in the range of $160 million to $165 million.

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