LinkedIn shares plummet on Q3 loss, stock sale

Professional social networking site increases revenue, but operating costs skyrocket

Shares of LinkedIn (NASDAQ: LNKD) fell as much as 11.6% in early Friday trading after the professional social networking site reported a third-quarter loss.

LinkedIn shares hit as low as 77.38 early Friday before bouncing back to 80.37 by early afternoon, still 8.2% below Thursday's closing price of 87.50.

Based on share price through early Friday afternoon, LinkedIn's stock is down about 35% from its all-time high of 122.70 set on the day of its ticker debut on May 19. (Keep that in mind, Groupon IPO suckers buyers.)

LinkedIn reported a third-quarter net loss of $1.6 million, compared to a net profit of $4.0 million in the year-ago quarter.

Revenue more than doubled to $139.5 million from $61.8 million in last year's Q3, surpassing consensus estimates calling for sales in the range of $127 million.

LinkedIn makes money through three sources: Its "Hiring Solutions," or paid jobs-listing service, which generated 51% of revenue in Q3; "Marketing Solutions," or site ads (29% of Q3 revenue); and "Premium Subscriptions" (20%).

Expenses also rose as LinkedIn continued to spend more on marketing, sales, research, acquisitions and global expansion. Operating costs soared 133% to $134.9 million from $57.8 million a year ago, with sales and marketing expenses more than tripling to $46.1 million, or 34% of total costs.

LinkedIn increased membership in Q3 to 131.2 million, up 63% from last year. It reported an almost identical percentage increase in unique visitors from a year ago to 87.6 million per month.

In order to continue spending to increase membership and traffic (and make the site more attractive to employers and advertisers), LinkedIn also announced plans to raise up to $500 million through a share offering.

LinkedIn said it expected fourth quarter revenue to be $154 million to $158 million and full-year revenue in the range of $508 million to $512 million, above consensus estimates of about $489 million.

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