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Andrew Linden

Morgan Stanley doesn't believe in LinkedIn

That's what their analyst told:

"With its current product offering, LinkedIn isn't likely to be as big of a platform as we previously thought," the team, led by Brian Nowak, said. "We are reducing our price target to $125 [per] share (from $190) as well, driven by our lower long-term cash flow forecasts and increased execution uncertainty."

That wasn't a surprise. Lots of analysts downgraded LNKD before, after a weak guidance for Q1. The problem here is that LinkedIn before this weak guidance and LinkedIn after this weak guidance is an absolutely the same company with the same products and perspectives. This is another example of how analysts work: 

the stock is going down -> the company's business model is weak, current product isn't as good as we thought -> decrease the target price

the stock is going higher -> this product is absolutely brilliant, their management is doing a great job -> increase target price

Are you serious? I personally want to find an analyst which is confident in the results of personal due dil and research. Morgan Stanley, Goldman Sachs, J.P.Morgan - you have an equity research departments, you have so much power in terms of searching the information and analyzing the data - why are you just following the market movements and don't predict them?


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