Facebook Earnings Report Gives Investors Zero Reasons to Stick Around

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The first Facebook earnings report since the company went public was released today (Thursday), and the numbers came in right in line with lowered, underwhelming expectations.

Facebook met earnings per share estimates of 12 cents on revenue of $1.18 billion. Analysts had expected EPS of 12 cents on revenue of $1.16 billion.

Estimates had been slashed several times and many experts did not think Facebook (Nasdaq: FB) would miss these lowered estimates – especially after is horrible IPO already delivered a colossal disappointment.

But the fact that earnings forecasts were so low made the fact that the company beat them a non-event.

"These earnings are meh," one equities analyst told Business Insider.

Another problem with the earnings report: There were no real clues as to how Facebook was ever going to make real money.

Facebook has had a hard time turning users into profits as more people use Facebook via mobile, an area Facebook has yet to monetize – and a key issue investors want addressed in today's earnings call.

"Everything is moving toward mobile," Debra Williamson, an analyst at eMarketer, told USA Today. "Gaining revenue from mobile and improving that experience are two things that Facebook absolutely has to focus on in coming years."

Reports surfaced Thursday that Facebook hired a team of former Apple Inc. (Nasdaq: AAPL) employees to completely redesign the Facebook iPhone app, which will no doubt include some of its new advertising plans. The aim is to generate more revenue from its growing mobile user base.

But it's still unclear whether or not Facebook can do that.

Will Facebook Ever Reach 1 Billion Members? Or Make Money from Them?

The biggest news from the report may not be Facebook's earnings but its growth, or lack thereof.

Facebook has only been publicly traded for less than three months yet the key aspect of its business seems to already be maturing.

Facebook is estimated to have already captured 71% of the 225 million U.S. Internet users, leaving little room for U.S. growth.

"The assumption that Facebook can maintain the 100% growth it reported Q2 2011 is no more plausible than the 45% growth it reported earlier this year," said Money Morning Chief Investment Strategist Keith Fitz-Gerald after the stock started trading in May. "Google couldn't. Apple couldn't. And both of them are real businesses."

Daily and monthly visitors totaled 552 million and 955 million respectively compared to last quarter's 526 million and 901 million, respectively. Mobile users amounted to 543 million.

But in the U.S., where Facebook makes most of its ad sales, the social network is not getting new users. In May, 158.01 million unique visitors used the site, compared with 158.69 million in April, according to market researcher comScore.

Facebook has grown remarkably since its inception, faster than exponential growth during its prime. But now it appears Facebook has exhausted its main resource, and once users disappear, advertisers will quickly follow.

While many experts point out that Facebook cannot sustain its growth, another issue surrounding Facebook is how effectively the company can monetize its massive user base.

"If Facebook doesn't figure out how to provide marketers with better performance and better metrics, we could reach a tipping point, where a lot of big-budget marketers figure out their money could be better and more accountably spent elsewhere," said Nate Elliot, an analyst at Forrester Research.

If Facebook can figure out a way to do that and take advantage of mobile users it might have a chance of surviving. If not it could be a bumpy ride down for Zuckerberg and crew.

Facebook Stock Reacts to Q2 Earnings

Facebook stock has never come close to the $45 peak it reached on its IPO day, hovering under $30 for more than a week now.

Facebook stock was hurt by Zynga Inc.'s (Nasdaq: ZNGA) poor earnings report which came out after Wednesday's close. ZNGA ended the day down more than 40% and blamed Facebook for part of its mess.

Facebook stock traded down today, closing with an 8.50% loss before the earnings report. Immediately after the report, the stock gained more than 2%, but later slumped more than 11% to a new low near $24.

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