New Trade: Long LinkedIn ($LNKD) & Short Zillow ($Z)

By: ispeculatornew
Date posted: 02.04.2013 (3:00 am) | Write a Comment  (2 Comments)

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After publishing my 2013 Tech Stock rankingsI’ve been able to start off the year with a few good trades. 3 out of my first 4 are profitable so far and one is above my 20% threshold which means I might close it at any point but for now, I do think there might be room for a bit more profits. You can see live performance of those picks here:

2013 Long & Short Tech Stock Picks

Today, I wanted to go long LinkedIn, despite the fact that it announces earnings this week, something I tend to stay away from. I looked at different alternatives and was looking for other high P/E trading stocks so Yelp ended up being a good candidate but in the end, given the explosion in “local”, I preferred going for a “safer” short. Here are the numbers for those 2 trades:

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Long LinkedIn (LNKD)

LinkedIn nearly ranked at the top of my 2013 social web stocks rankings but being #2 to Facebook (FB), especially when you know how  bullish I am of the Mark Zuckerberg-led company.  The fact is that LinkedIn is in many ways a unique company that could go in many different directions in the next few years with very little competition.  Yes, LinkedIn trades at an incredibly high P/E which creates challenges but I feel a lot better trading it against other high P/E names as I am doing today.

lnkd

LNKD Revenue Quarterly YoY Growth Chart

LNKD Revenue Quarterly YoY Growth data by YCharts

Next earnings: February 7th

zillow_logo-300x63Short Zillow (Z)

I wrote about both Zillow (Z) and Trulia (TRLA) last October and had not been very impressed by either company. That has not changed and I simply don’t see how in the world this stock can trade at such a P/E. Earnings will not explode and there is no reason in my opinion for the stock to trade at such high prices.  Yes, revenues have increased at a solid pace but that growth is slowing down and earnings have not tracked.

z

Z Revenue Quarterly YoY Growth Chart

Z Revenue Quarterly YoY Growth data by YCharts

Next earnings:  February 13th

Disclaimer: No positions on LNKD or Z

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2 Comments

  1. Comment by Tushar — February 6, 2013 @ 9:23 am

    I’m impressed with you site, insights on markets in general. Did you end up doing this trade (LNKD/Z) or not. Disclaimer says No Positions yet the write up indicates that you made this trade but doesn’t reflect in your current holdings spreadsheet.

  2. Comment by IS — February 6, 2013 @ 9:28 am

    @Tushar – Yes i did, I’ll update holdings right now, there is always a slight delay. Thanks for the feedback

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