Microsoft (MSFT) Buys LinkedIn (LNKD)

 

 

Monday's big news was the surprise deal made by Microsoft (MSFT) to acquire LinkedIn (LNKD) for 50% above its Friday closing price at a cost of over $26 billion, another clear sign of a market top since this is one of the more gross over-payments in history, arguably near a historic market top, by a company (MSFT) with a dismal track record of grossly overpaying for acquisitions that later bomb, in a sector known for companies frequently doing the same, and the company in question (LNKD) has negative earnings and is losing cachet by the hour.

LNKD has been in a down-trend since early 2015, with declining metrics and revenues to match, and almost certainly would’ve been under $50 sooner than later had this deal not happened.  Instead, it burst nearly 50% higher on Monday, yet still manages to be down materially in 2016.

MSFT shares were knocked down on the news, and will likely be far lower in the coming months.  Fortunately our short on LNKD was covered nearly two months ago, for a loss of 4.7%, however let this stand as a stark example of what can and does happen when dealing in individual stocks and if not adhering to a prudent plan replete with stops.

No doubt, something similar to this happened to many LNKD shorts, while the longs got extremely lucky. 


 

 

 

 

 

 



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