LinkedIn is the second social media site this week to post a dismal set of results.
While revenues were up by 35% year on year at $638m, losses had tripled to $42.4m. Membership increased 23% to 364m, however, showed clear signs of slowing. Shares fell by a massive 25% on the news.
Earlier this week, Twitter suffered a similar crash. Revenue was up 74% year over year to $436m but losses increased to $132m. The results were leaked, and in a twist of irony, went viral on Twitter, causing the share price to tumble by 26%.
Both Twitter and LinkedIn have a relatively small user base compared to Facebook, which seems to be the only social media company that has figured out the formula for making money.
Richard Holway of TechMarketView believes that the results indicate that the social bubble is about to burst.
“The social media bubble has many similarities to the 1999/2000 dot.com bubble. Nobody doubts that social media is a mass market of huge potential,” Holway said. “Just like with internet stocks, some will be fantastic winners – Facebook seems to be the clear winner at the moment – but others will be also rans and others will fail.”
“Overall, the market has over valued most of them," he added.