LinkedIn Fallout Pulls Rug from Under These Tech ETFs | ETF Trends

After announcing a dismal forward guidance, LinkedIn (NYSE: LNKD) shares plunged, and the carnage is rippling through technology sector-related exchange traded funds.

LinkedIn stock declined 42.5% Friday, erasing $10 billion of its market capitalization after providing a worse-than-expected first quarter outlook, reports Everett Rosenfeld for CNBC.

The social media company anticipates revenue of $820 million and non-GAAP earnings of about 55 cents per share for the first quarter, compared to average expectations of $868.3 million in revenue and earnings of 75 cents per share.

The tech firm’s guidance for the first quarter adjusted EBITDA – earnings before interest, taxes depreciation and amortization – was $190 million, compared to average forecasts of $213.9 million.

The company is expecting to tighten its belt for the short-term in response to the currently weak economy to sustain long-term growth.

“Our strategy in 2016 will increasingly focus on a narrower set of high value, high impact initiatives with the goal of strengthening and driving leverage across our entire portfolio of businesses,” LinkedIn CEO Jeff Weiner said. “Our roadmap will be supported by greater emphasis on simplicity, prioritization, and ultimate ROI and investment impact.”

CFO Steve Sordello attributed to the froward guidance to “continued pressure” in international markets from “current global economic conditions.”

The precipitous fall off in LinkedIn shares is dragging on the tech sector. For instance, the Global X Social Media Index ETF (NasdaqGM: SOCL), which focuses on social media companies, was among the worst performing ETFs on Friday, falling 6.9%. SOCL’s second largest component is LNKD at 10.2% of the ETF’s portfolio.