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Tech’s Top Stars Keep Growth Alive

11 February 2015 in Trading Ideas

Fresh off well-received earnings reports from the likes of Apple, Facebook, and Amazon, another trio of tech’s leading lights has offered up positive profit reports for investors.

LinkedIn and Twitter each reported fourth-quarter profit and revenue that topped estimates, sending their stocks and related social-media investments sharply higher despite weak guidance.1

The Social Networking motif has jumped 4.4% in the past month. In that same time, the S&P 500 has gained 1.4%.

Over the past year, the motif has lost 10.4%; the S&P 500 has increased 16.1%.

LinkedIn’s operating earnings rose 56%, while its revenue climbed 44% to $643.4 million, well above analysts’ consensus expectations for $616.8 million.

The company remains the dominant social network for professionals, Investors’ Business Daily said, deploying a steady flow of new products and upgrades for job-seekers and recruiters. Acquisitions and overseas expansion also are fueling growth.

While the company’s first-quarter revenue projection was below the Street’s average expectation, the midpoint of its range still called for growth of 31%.

LinkedIn ended the quarter with 347 million members, 15 million more than the prior quarter and up 25% from a year earlier. More than 75% of LinkedIn’s new members in the quarter came from outside the US.

Meanwhile, Twitter’s operating earnings were double the per-share expectations of Wall Street, while revenue soared 97% to $479 million.

As with LinkedIn, the midpoint of Twitter’s projected first-quarter revenue range was below the Street’s consensus, but it called for a 78% rise.

User growth and engagement has been a sore spot for Twitter investors, IBD said. Average monthly users rose 20% from a year ago to 288 million, but that was weaker than some estimates, the newspaper said. According to Twitter, that reflected a net loss of about 4 million net monthly active users in the fourth quarter due to the rollout of Apple’s newest mobile operating system, but those problems are past.

The first quarter could shed light on whether or not those numbers represented a blip.

Finally, one of the tech investing scene’s newest darlings also delivered the growth goods. Wearable camera maker GoPro said last week that its profit for the fourth quarter nearly tripled on solid demand during the holiday season, easily beating analysts’ expectations.2

The company said it shipped 2.4 million camera devices in the quarter, topping its shipments for all of 2012. Analysts had expected shipments to exceed 2 million for the period, which marks a record. For all of 2014, the tally was 5.2 million.

Overall, GoPro reported a profit for the quarter of $122.3 million, up from $43.7 million a year earlier.

Revenue surged 75% to $633.9 million.

The Wearable Tech motif, where shares of GoPro have a 5.5% weighting, has increased 18.4% in the past 12 months. The S&P 500 has risen 16.1% in that same time.

1Brian Deagon and Michele Chandler, “LinkedIn, Twitter Earnings Soar, Social Stocks Party,” investors.com, Feb. 5, 2015, http://news.investors.com/technology/020515-738168-linkedin-twitter-earnings-beat-stocks-rise.htm, (accessed Feb. 9, 2015).

2Angela Chen, “GoPro Results Surge On Strong Holiday Demand,” wsj.com, Feb. 5, 2015.