Will a Poor Facebook Earnings Report Seal the Stock's Fate?

The third-quarter Facebook earnings report will come out Oct. 23 after the markets close, and the results are looking increasingly dismal.

Despite a recent milestone (one billion users), a new "want" button feature and a "pay-to-promote post" option, the company has failed to drum up investor and analyst fanfare.

Wall Street shrugged off all of the recent news and Facebook (Nasdaq: FB) stock barely budged, except to move a little lower.

Even CEO Mark Zuckerberg's mid-September interview, which appeared to put some spark back into Facebook's fading shares, now seems like a very distant memory.

Since then, a bevy of analysts have become more bearish on the social network's near-term outlook.

Two analysts have cut estimates, and none have raised projections.

Facebook is now expected to earn 11 cents per share on revenue of $1.23 billion for the third quarter and the average estimate for Facebook's 2012 earnings is 48 cents a share.

And next year's forecast isn't any brighter.

In just the last month, half a dozen analysts have slashed next year's earnings estimates for the company. The current lackluster consensus is for Facebook to earn 62 cents a share in 2013, according to data from MarketWatch.

With its disastrous IPO no longer an excuse for fumbled earnings, the focus has shifted.

Now a public company, FB shareholders want to see growth, escalating earnings, analyst upgrades, insider buying, and a rising stock price.

Instead, they've gotten a stock that might never rebound.

Editor's Note: In fact, the stock still has plenty of room left to fall. Here’s what [ppopup id="70925"]Facebook is really worth.[/ppopup]

Facebook Earnings Report: The Obstacles

The obstacles facing Zuckerberg and Facebook are the same since the IPO, they've just been magnified.

What analysts and investors will closely watch in the Facebook earnings report will be any positive signs of change from the July quarter. An uptick in revenue would be widely applauded.

Concerns persist about the company's slowing growth, waning traffic, dwindling time members spend on the site, declining advertising sales and a sluggish foray into the explosive mobile market.

Plus, a deluge of shares are set to flood the market over the upcoming months. Some 192 million shares are set free later this month and another 1.7 billion are let loose in mid-November as lockups expire.

Following the first batch of 268 million shares freed up in mid-August, Facebook's stock took a tumble as early investors cashed in and fled.

The fresh torrent of additional shares has scores of potential investors sitting on the sidelines, further tempering any upward momentum for the already pressured shares.

"Buying Facebook now is like trying to catch a falling knife. You don't want to have a piece of it," Josef Schuster, founder of IPO research firm IPOX Schuster in Chicago told the Los Angeles Times.

Zuckerberg attempted to quell shareholders' mounting worries in last month's interview, his first since the IPO fiasco. In addition to pledging not to sell any of his Facebook shares, the 28-year-old leader addressed other worries and stressed the company is morphing into a truly mobile company.

But, he acknowledged getting there won't be easy.

Less than two weeks after the interview shares rallied 20%, but have since fizzled--yet again.

After going public on May 18 at $38, shares have been almost halved, and the company's valuation is a mere fraction of where it was at its fabled debut.

For now, any forward and upward momentum for Facebook shares appears to be gray at best.

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