LinkedIn (LNKD) Stock Gaining Momentum Right Now: Here's Why

Shares of LinkedIn Corporation (NYSE:LNKD) have been gaining solid momentum of late. One of the major reasons behind this could be the company’s better-than-expected top-line results for first-quarter 2016, along with an upbeat guidance for the full year.

Since the company reported last quarterly results on Apr 28, the stock has gained nearly 11%. Though the company posted a loss during the quarter, the figure was much narrower than the Zacks Consensus Estimate as well as the year-ago quarter level.

Moreover, LinkedIn’s first-quarter revenues surged 35% year over year and came ahead of management’s expectations as well as the Zacks Consensus Estimate.

Buoyed by an encouraging first-quarter performance, the company raised its outlook for the full year and issued an upbeat second-quarter guidance.

The outlook triggered an uptrend in the Zacks Consensus Estimate, reflecting increasing optimism among analysts on the stock’s future performance. Over the last 60 days, estimates for 2016 have increased from a loss of 26 cents to earnings of 21 cents.

The stock currently trades at nearly 47% discount to its last 52-week high of $258.39. Therefore, considering the recent upward estimate revisions, we believe that the company has a huge potential going ahead.

Furthermore, LinkedIn’s mobile segment has been gaining traction primarily on the back of the launch of its applications for Apple’s (NASDAQ:AAPL) iPhones and Android-based smartphones. Synergies from acquisitions — Lynda.com, Newsle and Bizo — are expected to garner additional earnings through targeted marketing strategies over the long term besides enhancing user experience.

We believe that LinkedIn’s initiatives to bolster advertising revenues through product launches and partnership programs have been commendable. We also expect advertisers to take note of the company’s growing user base.

LinkedIn’s investments in strategic products are imperative, in our view, as other companies like Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR) are equally keen on expanding in the professional networking space.

On the flip side, continued investments to provide new and improved products and services might hurt LinkedIn’s profits in the short run. However, over the long term, these investments will drive member growth and user engagement.