Following a disastrous revenue outlook in February, LinkedIn Corp (LNKD) reported Q1 results on April 29th that topped Wall Street estimates, soaring 35% on year over year basis to $861M.

The business-oriented social media company trades at a forward P/E ratio of 30.91x (2017 estimates), price to sales ratio of 5.37x, and a price to book ratio of 3.74x. Given the steady annual earnings growth in the 20% to 25% range, paying just over 30x EPS isn’t outrageous for the $15B company.

At 105.5M monthly active users, LinkedIn falls short of Twitter’s 310M and Facebook’s massive 1.65B user base. However, on a revenue/user ratio, LinkedIn’s $28.30 generated per user is quadruple that of Twitter and is well above the $10.80/user that Facebook (the largest social media company) is bringing in on the top line.

Their Talent Solutions segment is leading the company with nearly 40% growth in the U.S. and internationally, but unlike it’s two competitors has a substantial premium subscription model (+22% in the first quarter to $149M).

LinkedIn Corp Stock Chart

(Click on image to enlarge)

Observations and Considerations:

• Shares of LinkedIn are down more than 41% year to date
• After being nearly cut in half on a massive gap lower in early February, the stock then traded sideways for several months
• Now LNKD is attempting to break out above the $130 resistance level (began with a series of higher lows in April)
• LNKD traders may want to consider a stop loss under $125 on stock positions or buying the July 15 $130 calls for $6.50 for a favorable reward/risk ratio

It’s probably unrealistic to expect a gap fill to the $180-$190 range anytime soon (or for this year that matter), but the combination of improving sentiment, a growing, diversified business model, and a potential technical breakout could push shares to $150 sometime this summer. Second quarter earnings results are due out on July 28th.