By Benjamin Pimentel, MarketWatch
SAN FRANCISCO (MarketWatch) -- Facebook Inc. shares turned negative Wednesday, despite an upgrade and ahead of its earnings report, as LinkedIn Corp. and Yelp Inc. tanked on the social-media companies' results.
Facebook (FB) was down 1.2% in afternoon trades as the social network geared up for its third-quarter report due after Wednesday's closing bell. The stock also got a lift from BTIG analyst Richard Greenfield who upgraded it to buy from neutral, pointing Facebook's momentum in online ads.
"We are taking a notably more bullish view of 2014 and 2015, with 2014 revenues estimated at $10.5 billion," Greenfield said in a note in which he also acknowledged underestimating Facebook's potential.
"Facebook's ad load remains quite heavy, yet we notably underestimated Facebook's stickiness as a consumer utility for messaging and photo-sharing, not to mention the power of Facebook as a 'cure for boredom,' both in-home and on the go," he wrote.
The tech sector was also weighed down by slumping shares of Yelp Inc. (YELP) which were down more than 5% a day after the online business reviews site reported a wider-than-expected loss and announced plans for a $250 million secondary offering.
Shares of LinkedIn (LNKD) also shed 9% after the professional social network posted a weaker-than-anticipated quarterly outlook, even though the company beat Wall Street's estimates and its full-year outlook was largely in-line with consensus expectations.
"LinkedIn financial results beat our forecasts and member growth and engagement continue to be stellar," Cowen & Co. analyst John Blackledge told clients in a note. "Although the fourth-quarter guide was a tad light, LinkedIn is ramping revenues rapidly, expanding margins, and developing a host of promising new products."
Wedbush analyst Michael Pachter was also upbeat about the company's prospects, but also argued that "LinkedIn's valuation is stretched."
"While we believe that the company has significant room to grow, we cannot reconcile its current share price with its growth potential," he told clients in a note.
Shares of IAC/Interactive Corp. (IACI) gave up 10% after the Internet company posted weaker-than-expected revenue. The IAC stock decline triggered the Nasdaq's circuit breaker meant to shield stocks from manipulation by short sellers.
The Nasdaq Composite Index (RIXF) was off 0.7%. The Morgan Stanley High Tech 35 Index (MSH) and the Philadelphia Semiconductor Index (SOX) were each down a fraction.
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(END) Dow Jones Newswires
October 30, 2013 15:01 ET (19:01 GMT)Copyright (c) 2013 Dow Jones & Company, Inc.
|TECH STOCKS: Facebook Turns Negative; LinkedIn, Yelp Fall ()|
|UPDATE: Facebook turns negative; LinkedIn, Yelp fall (2013/10/30)|
|TECH STOCKS: Facebook, LinkedIn Fall Ahead Of Twitter IPO (2013/11/6)|
|TECH STOCKS: Facebook, LinkedIn Fall Ahead Of Twitter IPO (2013/11/7)|
|TECH STOCKS: Facebook, Yelp Drop As Momentum Stocks Lose Favor ()|
|TECH STOCKS: Facebook Hits New High; LinkedIn Rallies ()|
|TECH STOCKS: Facebook, LinkedIn Down As Twitter Debuts (2013/11/7)|
|TECH STOCKS: Facebook, LinkedIn Down As Twitter Debuts ()|
|UPDATE: Facebook rallies, but LinkedIn, Yelp slip (2013/10/30)|
|Facebook rallies, but LinkedIn, Yelp slip (2013/10/30)|
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