Investors Connect With LinkedIn

Shares soar on better than average earnings.
6:51 | 08/01/14

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Transcript for Investors Connect With LinkedIn
-- I'm Gloria Riviera in New York as the financial markets close on Wall Street this Friday the first of August this is story stock. And one stop with a story today is linked in the online hub in social media network showed some. Better than expected numbers causing its shares shouldn't jump. For all the latest I'm joined now by Rick Newman. From Yahoo! finance -- -- thanks for joining us let's get right to -- why are investors so bullish Arlington right now. -- has two things investors like first to beat estimates a lot of companies do that. But Lincoln also said it is -- raising its forecast for earnings later this year earnings revenue. Users -- Linkedin is one of those companies that's doing something rare these days it is it's making more money. The way you want companies to make money which is by getting more business a lot of companies. Have they were improving their profitability by by cutting costs finding new ways to be efficient. And you're got a company that is -- a growing part of the the of the economy technology and social media. And is actually making money the way you want companies to do so that's a pretty happy about that. It let me ask your question me as they watch all of these companies based later this list goes on and on and the big question is where they making their money where is linked in making its money is a date -- Mining and selling that information -- where the dollars coming in -- Yeah that's obviously an important question. And this is what sets Lincoln apart from other social media sites Twitter FaceBook in particular. Linkedin gets a little bit of revenue from advertising the way other social media sites do but it most of its revenue. Actually comes from. People paying for subscriptions these are so called premium subscribers. Not too many other social networks actually get people to pay to belong to them. And the reason Linkedin does is because it's a professional networking site. People are on their their -- people are basically investing in their careers. They've also got companies that are paying. Linked in to help them. Find particular types of people they want to hire blinked and has something called talent services which is something it offers to businesses so Linkedin is actually providing a lot of services to people beyond just this vague idea. That if they get enough users everybody we'll find each other and create something useful lot of -- they are actually. Helping people get jobs and are helping companies find the people they want to have a lot of value -- that. It seems like a combination of an old school brick and mortar head hunting firm combined you know sort of morphed into. -- -- it's palatable to social -- today. But that it's not all rosy -- linked in revenue may be up 47%. But there was that net operating loss of a million dollars -- how about a million dollars and we're hearing you know Alli Bachmann. Based on these -- hundreds of millions of dollars maybe that's a drop in the bucket to -- But not to me I'm -- not a lot of people looking for a job so so how how -- they had a day how does that work how does. -- that undoubtedly happen that actually is a drop in the bucket that was due to one time. Costs that basically. Investors overlooked and -- and what what impressed investors was they're operating profit which is the amount of money you make before you have to account for those one time costs. And that was up very nicely and when when you hear companies -- what we did better than you guys expected this quarter and we're gonna do better than even we thought for the rest near me a lot of companies are very gun shy about making. Predictions like that and we hear companies say we think things are gonna be even better in the second half here they were the first we are going to be making money that -- investors excited. And if you look at the overall environment yes the economy is still kind of -- in places. But what we saw today -- the jobs report is we have had pretty good job growth so far this year. And company likely -- -- in -- surfing that wave. I mean I think I'm sure that has a lot to do with what my business is good because they are. In the right part of the economy companies are hiring they need to find people of people are out looking for jobs may be thinking about moving around for the first time in five years. In Lincoln is -- Miller that's a great position to -- I know I want shows like on their morning conference -- that jobs report came out you know it's like this isn't letting them -- -- news and then elevate his. OK let's go to -- today chart right now let's. Let's take a look at that it what we saw the last two days -- you can just break that down for us. How significant is that -- that we see their for Lincoln. That's -- -- 10% spike -- -- is showing about a half percent that's terrific -- -- any company would love to have that. What you hope happens is -- in the future we don't see a pullback because investors overshot. Let's keep in mind this is this this stock has gone up. At a time when they're being pretty serious concerns about the market as a -- on big decline yesterday. Kind of stayed flat today that investors are very worried about -- on the broader economy so you could have a situation where. This is one of the few stocks is looking bright during a little you know sort of grade time in May be too many investors piled in that -- I suppose. Could suggest a committal pullback in the stock player but if things are going away -- -- says they're going. This is going to be a big year for this company. One more question before we let you go -- -- Do you see do you think we're seeing the start of a bigger trend here is Linkedin. You know name -- mentioned they've been up there with the big players. But not quite all the way up -- Twitter FaceBook got. Is is this where they're headed or is -- user base just not big enough to sustain and. -- that's a good question because Linkedin has something like 300 million users and they are getting to a point where they're sort of saturating. The white collar job market United States sell that what that means is there. There they're growth in subscribers here in the United States is in the next few years is probably not -- be anything like what it's been like in the last few years and they've got. Many of the workers who are likely to be on there they have to expand overseas. And it probably have to find even more types of services to offer their subscribers in the companies that come to them. They do say they are -- they are -- operating overseas and they are planning expansions there. And I have to deliver on that mean that could end up being a lot harder the rest of the world's economy is not quite as. Good even as it is United States and that's something very a year to from now but for now you know the stock market doesn't always looked that far ahead and things are looking at Burlington right now. Rent -- one of the places -- -- looking to expand in -- China and their sort of free from the censorship should issue is that. Affects and other. Other companies there but they've also come under some critique for even operating in China but yet as you say huge overseas market right there -- potential for -- Rick Newman. Thanks for joining us -- great data gets up to speed C next time. You've been watching stories stock stay with abcnews.com. For your latest headlines I'm Gloria Riviera in New York.

This transcript has been automatically generated and may not be 100% accurate.

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