GoPro, LinkedIn, Starbucks: A Big Day for an Earnings Report

Thursday was a big day for corporate earnings. Three high-profile companies released their earnings report after the market close and on Friday, two of them rose by double-digits.
GoPro (Nasdaq: GPRO) has been a battleground stock since its big IPO in June. And LinkedIn (Nasdaq: LNKD) is no stranger to big swings in its stock price. Starbucks (Nasdaq: SBUX) is the third major company that declared earnings Thursday.
All three of these earnings reports were highly anticipated. Here’s how investors reacted to each.

Earnings Report #1: GoPro

GoPro shares leapt higher after the company blew out earnings expectations Thursday afternoon. The company grew revenue by 45.7%, bringing in $16 million more in revenue than the company’s already lofty forecasts. Shares rose around 13% Friday despite what seems to me to be relatively illogical valuation metrics. Today the stock trades at a Forward PE of 67.11.
Compare that to the Forward PE of Apple (Nasdaq: AAPL), roughly 13.72.
GoPro stock briefly touched a high above $98 dollars per share in early October, a gain of over 300% since its IPO. But shares of the versatile camera maker fell hard in October’s market turmoil, down over 30% before Thursdays earnings report.

Earnings Report #2: Starbucks

Starbucks was the dud of the group, though the company still declared record earnings. COO Troy Alstead announced on the conference call: “Each of our reportable segments set new fourth quarter records for revenue and operating income.”
It wasn’t enough for investors though, as the stock traded lower by just over 2% Friday.
I was hoping to hear more about how Starbucks plans to leverage its success with mobile payments, mobile purchasing and loyalty programs to build loyalty and mobile platforms for other retailers.
Though I didn’t hear about this in the conference call or in the earnings report itself, I was intrigued by the success Starbucks has achieved with its mobile app. The word “mobile” was mentioned 49 times during the call, and it is clear that the company sees consumer behavior shifting towards mobile with increasing velocity.
It is little surprise why. Starbucks is seeing incredible success with its mobile app, which processed more than $500 million worth of sales in the last quarter alone.

Source: Business Insider

I’m still waiting to hear how Starbucks will monetize its mobile prowess by offering services to other retailers. It could be a hugely profitable and entirely new line of business for Starbucks.

Earnings Report #3: LinkedIn

LinkedIn’s rise continues, though it has been a rough 2014 for the professional social network. The stock is only up 4.5% for the year, even after rising almost 13% Friday.
LinkedIn was able to live up to and even surpass the hype. The company beat revenue growth expectations by $10 million and surpassed already high earnings-per-share growth expectations by a whopping 12.8%.
Take a look at this revenue growth chart to see why:

Source: Business Insider

Because the company is giving out a lot of stock options and investing heavily in the business, it still reported a loss. As such, it can’t be compared on a price-to-earnings (PE) basis. But its Forward PE has surpassed 79, an even more ridiculous valuation than that of GoPro.

The Bottom Line

LinkedIn, like GoPro, was able to live up to and surpass lofty investor expectations. That’s why both stocks surged by double-digits Friday.
Starbucks, on the other hand, wasn’t. I’d love to hear more about its mobile division in the coming months and I expect it to continue driving Starbucks’ growth. As for LinkedIn and GoPro, investors can only hope that the next earnings report lives up to expectations as this one did. I, for one, am not interested in these stocks at these levels.
Disclosure: I personally own shares of Apple.

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