Macro Wrap – Internet Earnings Roundup, $LNKD, $YELP, $TRLA, $BIDU

by Enis October 30, 2013 8:14 am • Commentary

Perhaps most interesting to me has been the reactions of the social media stocks to earnings so far this quarter.  While the largest internet companies (GOOG and AMZN) soared after decent numbers, the momentum leaders in the internet space have acted much less enthusiastically following their reports.  First NFLX’s big reversal, and now LNKD and YELP lower in the pre-market this morning.

LNKD beat on both earnings and revenues, but guidance was lower than expected.  Having said that, LNKD has consistently guided on the conservative side, and traders have normally taken the shares higher on the earnings report anyways.  The reaction this time around (down 3.5% in the pre-market) shows that there are simply fewer aggressive buyers.  With institutional ownership around 93%, LNKD might be too large a part of fund managers’ portfolios.

YELP beat on revenues and missed on earnings, but actually raised revenue and EPS guidance for the the 4th quarter.  Once again, traders were less forgiving than usual with YELP.  The stock is trading down about 7.5% in the pre-market.  Along with the earnings report, the company also announced a $250 million secondary offering.

One bright spot among U.S. internet earnings reports last night is TRLA.  Trulia is a $1.6 billion market cap real estate website, a competitor to the larger Zillow, which reports next week.  The stock had a messy report with a lot of moving parts, but broadly speaking, revenue and revenue guidance was stronger than expected.  The stock is up more than 5% in the pre-market.

Meanwhile, BIDU was a bright spot on earnings once again.  After struggling to start 2013, the stock has been a huge winner since July.  The company’s earnings slowdown in 2013 seems to have been a temporary blip, as investments in various verticals (travel, video, apps, and, of course, mobile) look to be paying off based on the company’s raised guidance this quarter.  That’s a particularly strong report considering the weakness in SOHU’s report earlier this week (see yesterday’s Macro Wrap).  The stock’s trading at a new all-time high in the pre-market, up around 7%.

The big kahuna is FB this afternoon after the close.  We previewed earnings yesterday, and will post later today our thoughts on a trade ahead of the report.