Do I owe LinkedIn an apology? [LNKD]

In a post last week I referred to LinkedIn as a "joke company" and admitted that I really hadn't been following it but that I never thought much of its business model.  The reason it was a "joke" is that this was my gut reaction to the massive 40% price crash in one day.  Nobody can predict that kind of thing in advance but it certainly doesn't garner much respect for the shares when it does happen and of course I don't have time during normal work days to do much deep reading or analysis.  I can do a quick post here and there but not enough to have looked deeper into something like this.

So at the time I just assumed that the crash was because the company never made any money and the herd finally decided that enough was enough.  But over the weekend I read the numbers and this company is no dot bomb "lots of eyes but never a profit" scam, at least if you believe the numbers they provide:

For the first quarter:

• Revenue of approximately $820 million, representing 29% percent growth.
• Adjusted EBITDA of approximately $190 million, a 23% margin.
• Non-GAAP EPS of approximately $0.55 cents per share.

 For the full year:

• Revenue between $3.6 and $3.65 billion, a range of 20% to 22% year-over-year growth. This includes a 2% F/X headwind. It also incorporates removing $50 million in potential Bizo revenue contribution in 2016.
• Adjusted EBITDA between $950 and $975 million, a 27% margin at the midpoint.
• And non-GAAP EPS of approximately $3.05 to $3.20 per share.

So the shares got creamed based on simple over valuation, not the inability to make money.  It also struck me that this "bad" quarter happened just as unemployment was bottoming and layoffs are now picking up again as we head into recession.  Oh year, the R word is coming even though it is an election year.  The numbers show it more and more each week.

So it's clear that I don't know where they are making their money from but they apparently either run a lot of drugs and guns or they actually do sell "inmail" to a Hell of a lot of people.  And let's be fair, their web interface is pretty good and it does serve a purpose of keeping the herd connected without being too intrusive.  But I am surprised that they make this kind of jack just for putting up a website.  It's clear that when their services are needed and paid for that their margins can be astronomical.

And so with that I decided to see if I could pull a bullish count out of this mess and again to my surprise, I could.  See below.  One can count 5 up and, so far at least, 3 back which stopped exactly at a deep vee kind of fib number.  And with the economy very likely entering recession, their services should be needed again.

So I'll wait for confirmation of a bottom here  before actually apologizing about the "joke company" quip but if this is bought immediately and then set tops to trigger if a lower low occurs, my model says it is actually not a bad bet at all because of this pullback.