Facebook earnings report
Facebook stock rose nearly 3% Tuesday to come within $11 of its IPO price - but a disappointing earnings report could send shares plunging if the social media giant doesn't show healthy improvement.
One of the biggest things to watch when Facebook Inc. (Nasdaq: FB) reports Q1 earnings after the close Wednesday will be how the company is managing the transition to mobile.
Why Facebook Stock Soared After Earnings Report
Facebook stock (Nasdaq: FB) was up almost 10% in the first 30 minutes of after-hours trading today (Tuesday) after the release of its third-quarter earnings report, its second as a public company.
Releasing earnings after market close, the social network leader posted earnings per share of 12 cents, on revenue of $1.26 billion, or 32% higher than the year-ago quarter.
While Facebook did not provide an outlook following its uninspiring second quarter release, analysts were looking for 11 cents per share on revenue of $1.2 billion, according to data from Thomas Reuters.
In addition to the earnings beat, the following highlights helped Facebook stock soar after the earnings release:
- Mobile users increased 61% year-over-year
- Monthly active users were up 26% year-over-year
- Daily active users rose 28% year-over-year
"As proud as I am that a billion people use Facebook each month, I'm also really happy that over 600 million people now share and connect on Facebook every month using mobile devices," said Zuckerberg. "People who use our mobile products are more engaged, and we believe we can increase engagement even further as we continue to introduce new products and improve our platform. At the same time, we are deeply integrating monetization into our product teams in order to build a stronger, more valuable company."
But this positive vibe doesn't mean Facebook's earnings problems are solved.
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.
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Will a Weak Facebook Earnings Report Open Doors for these Competitors?
We know investors will want a few key details from today's Facebook earnings report, like how much more user growth the site expects, if it can increase ad sales and how it'll tackle mobile usage.
But something people haven't questioned as much is if there are any competitors lurking in the shadows that could eat away at Facebook's online presence.
Turns out Facebook has reason to be concerned.
MarketWatch's David Weidner last week addressed some competition creeping into Facebook's world. In his article "Here's the app that could kill Facebook," Weidner detailed how an up-and-coming app could actually threaten Facebook's hold on social networking.
Tack this on to the list of reasons to avoid Facebook stock - in case you needed any more.
Path: A Facebook Threat?The app in question is called Path.
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Three Reasons the Facebook Earnings Report Will Disappoint
The Facebook earnings report for Q2 will be released Thursday after market close - meaning investors have a chance to see if concerns over Facebook's revenue and growth are warranted.
It's only been two months since Facebook's (Nasdaq: FB) long-awaited May 18 IPO. The day didn't exactly turn out as planned with Nasdaq's technical problems delaying trading and a measly one-day gain of 23 cents.
The result has been a lingering frustration among investors who hoped they were buying the next big tech stock - and are now in the red.
Since then, Facebook stock has fallen 24%.
A lot of expectations and answers should come with the Q2 earnings Thursday, but we're not so sure they'll be the answers investors have hoped to hear.
Here are three reasons we think the Facebook earnings report will disappoint.
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