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LinkedIn Shares Soar 20% After Doing ‘Almost Everything Right’ Last Quarter


The concept of building a dominant Internet networking company is simple. 1) Build a site. 2) Achieve critical mass by making it the "go to" spot for making connections. 3) Keep the infrastructure robust enough to handle massive traffic.

The issue is execution. AOL 1.0 (AOL) failed because it didn't keep up with high-speed Internet. My Space let itself become lame and slow and wiped off the map by Facebook (FB). Countless sites you've never heard of failed because they built it yet no one came.

With their boffo quarter reported late yesterday, professional networking giant LinkedIn (LNKD) showed they just might have all the ingredients needed to stay on top. The company posted 35-cents per share in earnings, far above the 19-cents expected. Revenue grew by 80% year-over-year, guidance was raised, and all seems very right in LinkedIn's world.

"They did almost everything right," said Jon Najarian, co-founder of OptionMonster.com. LinkedIn has reached such mass that it's not just a place to find personal connections, but a way to check in on other companies. By way of example, Najarian mentions struggling online game maker Zynga (ZNGA) as a company with a lot of current or recently departed employees posting resumes and making connections.

So the quarter was great, the company is re-investing in its infrastructure, and it seems to be doing everything right. That hardly comes as a surprise to shareholders. LNKD is trading as much as 20% higher today alone, and 90% higher in the last 12 months.

Would a prudent investor chase shares that have already seen such gains? Najarian thinks they just might.

"I won't be surprised if I do see (shares) pull back because just look at this quarter how much it's moved up," Najarian says. Whatever you think of the stock, you have to admire the company itself. "It's a phenonmenal success story, I'm glad they're here and I'm glad it's an American company."