LinkedIn Poised to Drop?

By Chris Vermeulen  JUL 27, 2012 10:45 AM

The fundamental and technical stories for LinkedIn are both saying the same thing.


Last night Zynga (ZNGA) tanked, dragging down Facebook (FB) with it.  There’s been a lot of hype regarding everything social, but not exactly a lot of follow-through regarding earnings.  Recently a new member of our team at TTT, Brennan Basnicki, put out a fundamental piece on LinkedIn (LNKD) that I think merits a good read-over as it is applicable to many of the high-flying tech stocks we’ve seen get absolutely crushed lately.  Further, if we look at some more of the fundamentals and technical indicators, I think we may have found a prime shorting candidate.

On the fundamental side:
On the technical side:

Click to enlarge

I don’t typically advocate positions on single stocks as you’re always prone to news events and whatnot that can have serious implications.  That being said, the fundamental and technical stories, both seem to point downwards on LinkedIn.  With a beta of 1.6, the direction of the market will likely be the single most important factor for LinkedIn up until its 2012 Q2 earnings announcement on August 2.  Also keep in mind that if you do enter a short to keep a stop in , I would be cautious taking any position during the earnings report.  LinkedIn is very volatile and has already caused a lot of shorts quite a bit of grief.  That being said, the timing may finally be right.  If you’re looking for a little more action, maybe take LinkedIn short on one of our next short plays.

Editor's Note: Chris Vermeulen offers more content at his sites, and Traders Video Playbook.
No positions in stocks mentioned.

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