We have been saying this for so long! Copying it on this Blog in case LinkedIn takes it down!
LinkedIn’s whistleblower explains the real story behind its collapse
This is my last post before I take a healthy break. Would come back in a week or two and reply to any comments.
The first time I’ve assigned myself the title of LinkedIn’s whistleblower was 2 months ago, and I feel I’m obligated to do a better job, than I did several days ago, explaining the latest collapse of its share price.
I’m using the term whistleblower to remind any LinkedIn executive reading this, that although this post is published on their platform, it makes me and this post untouchable.
The current reality of having 2 classes of shareholders, those who have read my claims and those who haven’t, is perilous and actually increases the damages LinkedIn would suffer later on. Also, as long as the alleged reason for LinkedIn’s dive is not made public then this badly affect other tech stocks, by wondering and fearful shareholders.
So, if you are reading it, please spread this post on all platforms like wildfire
My claim
The weak guidance LinkedIn provided last week did not alone cause its share price to collapse. There was a crucial additional factor not made public, the claim that LinkedIn disclosed to its shareholders false data showing an accelerated growth in engagement by its members.
I raised and proved this claim here a month ago:
Are LinkedIn’s NASDAQ disclosed engagement numbers disingenuous?(Published on January 7 2016). BTW the flawed UX I identified in that post was introduced during the first half of 2015.
Many analysts have read it back then, including Mark Mahaney the managing director of RBC Capital Markets, whom I’ve quoted in the above January 7 post (he replied with thanking me for sending it to him).
I believe last week with the release of the Q4 2015 results and weak guidance, which can’t coexist with an accelerated growth in engagement as claimed, did they put 2 and 2 together to realize they were provided with false user engagement metrics, including on the Q3 2015 release and earnings call.
And so they have lost their trust in LinkedIn’s management, understanding that the issues may be far more serious than revealed last week.
What better support for this than the beheading that same Mark Mahaney did last week to LinkedIn’s price target dropping it from 300$ to 156$.
Not only that, his following quote (original article) in response to LinkedIn’s disclosed explanations for its weak guidance basically tells you the same story I just did:
“We do not believe that this alone can account for all of the downside to guidance, implying to us material deceleration in the core business”
UPDATE:
In LinkedIn's 10-k filling from February 12, 2016, LinkedIn has obviously understood the false metrics issue, and has provided the following telling sentence which contradicts statements about accelarated growth of engagements made recently and claimed false by me:
"...we believe member and engagement growth, as measured by our key metrics,will decelerate over time and that this may impact the growth of certain portions of our business"
Cheers, Itai
Itai Leshem
Founder and CEO of Trailvest.com
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