WWM - Analytics

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    Today’s Trading Edge: LinkedIn shares plunge after Revenue guidance disappoints

    LNKD_FEB_4_2016.jpg 

    LinkedIn Corp. (LNKD) shares dropped almost 30% in after hours trading after providing disappointing annual earnings guidance. The company forecasted a first quarter profit of $0.55 a share, lower than analysts’ consensus $0.72. Revenue for the same period was forecasted at $820 million, much lower than the eyed $867 million. Full year sales guidance was seen between $3.60 billion to $3.65 billion for the year, analyst consensus eyed $3.9 billion. The conference call that followed the earnings release highlighted the new flagship product launch that has not yet been incorporated into guidance.  

    Price action on the LinkedIn 240-minute chart shows the after-hours drop may found tentative support from 261.8% Fibonacci level of the last bounce higher that occurred in the middle of last month. If price drops below this key Fibonacci level, we could see further pressure target the $125.00 zone. A break below that region could open the door for a deeper drop towards the psychological $100 handle.      

    If the current slide is short-lived, initial resistance will come from the 2015 low of $165.57. A weekly close above that level could open the door towards the $184 area.    

    The Trade: Sell LNKD at $145, with a stop loss at $155 and a take profit at $125.  The Risk/Reward Ratio is 1:2


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