NEW YORK (AP) — Last week wasn’t easy in social media, despite double-digit revenue growth from Twitter, LinkedIn and Facebook. Investors were looking beyond headline numbers and finding reasons to sell.
Not even Facebook, with stronger-than-expected profit and revenue numbers and a bulletproof mobile advertising strategy, was spared. Its stock was down 2.6 percent for the week, compared with about a 1 percent increase for the Standard & Poor’s 500 index. A whopping 82 percent rise in company expenses spooked some investors.
Although their stocks dipped across the board, there was no common thread that ties the companies’ fates together.
Facebook has been trading near record highs, so some investors may have been cashing in on profits.
Twitter’s stock, on the other hand, has been trading near its lowest level in two years over concerns about its ability to attract users, not to mention several high-profile departures. It lost about 12 percent last week.
Yelp fared the worst, its shares down 25 percent for the week as some questioned the company’s ability to survive on its own.
LinkedIn, whose stock was down about 8 percent for the week, delivered quarterly results above Wall Street expectations. But the company said that one of its business segments, display advertising, is seeing some softness. Investors took that as a sign to cut back.
Some industry analysts, urging patience, noted that the professional-networking service is showing strength in newer areas. It acquired Lynda.com, an online learning site, in the second quarter in an effort to extend its services to people who are not looking for new jobs.
Sarah Hindlian of Brean Capital said the Lynda acquisition masked what was actually a weak quarter for LinkedIn. The company, she said, cannot continue to acquire expensive firms “to bolster growth forever,” and its core segment, which makes money by charging businesses and headhunters to find job candidates, is slowing.
While user growth for Twitter — popular with celebrities, journalists and young people — has been stalling, Facebook has nearly 1.5 billion people who check in at least once a month, or nearly a fifth of the world’s population.
Facebook, however, is spending heavily on hiring and on new endeavors such as virtual reality and drones to help bring Internet access to remote parts of the world.
“Facebook is making the right choices for the long term, but the short-term-focused market won’t like expenses that grow faster than sales,” said Edison Investment Research analyst Richard Windsor.