LinkedIn tanks 28% after forecasting profit below estimates

(Reuters) — LinkedIn forecast current-quarter profit and revenue below analysts’ estimates, citing weakness in its recruitment services business in markets outside North America.

Shares of the company, which operates the world’s biggest networking site for professionals, plunged more than 26 percent to $141.44 in extended trading on Thursday.

LinkedIn forecast an adjusted profit of about 55 cents per share for the first quarter, way below the average analyst estimate of 74 cents, according to Thomson Reuters I/B/E/S.

Its revenue forecast of about $820 million also missed analysts’ expectations of $866.9 million.

LinkedIn’s recruitment services business is facing pressure in Europe, Middle East and Africa and Asia-Pacific regions, “given current global economic conditions,” Chief Financial Officer Steve Sordello said in a statement.

The business, Talent Solutions, helps companies find potential employees.

LinkedIn has also been spending heavily on expansion by buying up companies, hiring sales personnel and increasing its presence in China and other markets outside the United States.

The company reported a net loss of $8.4 million, or 6 cents per share, attributable to the company for the fourth quarter ended Dec. 31, as it expenses surged.

LinkedIn had a net income of $3 million, or 2 cents per share, in the year-earlier quarter.

Excluding items, the company earned 94 cents per share, higher than the average analyst estimate of 74 cents.

Revenue jumped about 34 percent to $861.9 million.

(Reporting by Natalie Grover and Sai Sachin R in Bengaluru; Editing by Kirti Pandey)