Recent LinkedIn news revealed that the company is under fire for using its stock to pay its workers. The professional social networking company's value has been decreasing and may continue to lower this year.
The New York Times reported that LinkedIn paid its employees $319 million in stock, which was about 14 percent of its revenue, in 2014. This rose to $510 million, equivalent to 17 percent of the revenue.
That time, the figures were not an issue since the stocks were increasing in value. Now, however, it was noted that the method has been criticized by Wall Street.
The publication revealed that Wall Street has been closely monitoring the stock grants that LinkedIn is giving to its employees. This comes after its shares took a 43.6 percent plunge in February, removing about $11 billion of the company's market value.
"It's not a great day to have reported tough guidance," Avondale Partners analyst Randle Reece said at the time. "The mediocre employment report from the Labor Department just amplified the reaction of anything employment-sensitive today."
The professional social networking site is also expected to have even lower growth this year. Moreover, its stock price has unfortunately fallen.
This led to concerns that the company's stock-based compensation method "provides additional reason to remain cautious." The issue is not limited to LinkedIn, though.
Other tech companies are being scrutinized by investors as well for the same compensation method. Of course, there is no problem when the company's stock is doing well.
The problem arises now that public tech companies are having a difficult time in the stock market. This led to investors closely studying the companies' financial results.
Mark Mahaney, an analyst at RBC Capital Markets, has noted that stock-based compensation may "distort the quality" of how much the company is earning as well as make them look stronger than they are."
According to Android Police, LinkedIn has unveiled a new app called LinkedIn Students for those in college. The app suggests jobs which users may not have thought about with their educational background.
