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LinkedIn suffered a large drop in share value following an unexpectedly weak forecast of their future earnings.  Why would this surprise cause investors to value LinkedIn lower?

LinkedIn suffered a large drop in share value following an unexpectedly weak forecast of their future earnings.  Why would this surprise cause investors to value LinkedIn lower?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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LinkedIn suffered a large drop in share value following an unexpectedly weak forecast of their future earnings.  Why would this surprise cause investors to value LinkedIn lower?

LinkedIn Drops in February 2016 "LinkedIn shares drop 43% as weak forecast spooks investors" - The Guardian, Feb. 26, 2016 $250 $200 $150 $100 $50 225.08 $0 12/31/2015 LinkedIn Share Price December 31, 2015 to May 31, 2016 197.91 1/29/2016 117.19 2/29/2016 114.35 3/31/2016 125.31 4/29/2016 136.50 5/31/2016
Transcribed Image Text:LinkedIn Drops in February 2016 "LinkedIn shares drop 43% as weak forecast spooks investors" - The Guardian, Feb. 26, 2016 $250 $200 $150 $100 $50 225.08 $0 12/31/2015 LinkedIn Share Price December 31, 2015 to May 31, 2016 197.91 1/29/2016 117.19 2/29/2016 114.35 3/31/2016 125.31 4/29/2016 136.50 5/31/2016
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