One of the most closely watched earnings reports comes after the close Wednesday when Facebook Inc. (Nasdaq: FB) earnings for the second quarter are released.
Facebook (NASDAQ: FB)
Facebook's largely failed IPO made investors bearish on new offerings, but an IPO of the fast-growing design site Fab.com IPO could change their minds. Read more...
The stock market today is down more than 200 points as China fears trigger a global sell off.
In mid-morning trading, the Dow dived 205.75, 1.39%, to 14,593.65. The S&P 500 slumped 25.78, 1.62%, to 1,566.65. The Nasdaq slid 50.78, 1.51%, to 3,306.47. The Dow and S&P are now off some 5% and 6% respectively from their all-time highs reached earlier this year.
Asian markets were clobbered Monday and European markets melted on increasing fears of a liquidity crunch in China. Major Euro indexes, off roughly 10% from their April highs, are officially in bear territory.
Today's moves continue the rollercoaster ride U.S. equities were on last week, with the Dow shedding 560 points, or 3.66%, over Wednesday and Thursday.
The blue-chip benchmark finished at 14,799.40, down 1.8% for the week, its worst week since April 19. The S&P 500 fared worse, slumping 2.1% last week to end at 1,592.43. The Nasdaq ended at 3,357.25, for a weekly loss of 1.9%.
The VIX, or the CBOE Volatility Index, soared 10.2% last week, ending at 19. Wall Street's "fear gauge" has risen four of the past five weeks, ever since Fed Chief Ben Bernanke's first mumblings about a probable winding down of stimulus.
Monday morning, the VIX jumped 2.14, or 11.23%, to 21.04, its highest level of the year.
Markets were goosed Friday after The Wall Street Journal's Fed watcher Jon Hilsenrath wrote that investors may be misreading optimistic messages sent by the Fed Chairman Ben Bernanke as hawkish.
Also, Goldman Sachs (NYSE: GS) analysts said their top recommendation for 2013 is still to buy stocks and sell bonds.
"We continue to expect the index [S&P] will close the year at 1,750, a rise of approximately 10% from today's top level. However, median historical drawdown episodes suggest at some point during the next six-months that the S&P may decline to mid-1,500s before resounding to our year-end target," Goldman's analysts wrote.
Further giving stocks a lift was a bullish statement to CNBC from renowned hedge fund manager David Tepper, founder of Appaloosa Management: "All the concerns in the markets is because the Fed sees the economy stronger in the future. In fact, their forecast shows that they will wait until a lower unemployment rate (closer to 6% than 6.5) to raise interest rates. So they are a bit easier on the front...I obviously thought they should start to taper. [But] the bottom line when the dust settles [is that the] only one place to be [is] stocks."
If you can stomach it, Shah Gilani explains the sordid details behind the blown IPO… Read more...
Missing amid the numerous stock market milestones and seemingly unstoppable rallies since the start of the year is Facebook stock.
Tuesday marked the 20th consecutive Tuesday the Dow Jones Industrial Average closed with a gain. And, the Standard & Poor's 500 Index, up 16.4% year-to-date, finished just nine points shy of its all-time high of 1,669.16 hit mid-month.
Meanwhile the Nasdaq, Facebook's (Nasdaq: FB) home exchange, has gained 4% in May and 16% this year.
In contrast, Facebook stock is down some 10% year-to-date.
One year ago, Facebook stock (Nasdaq: FB) made its trading debut in one of the most highly anticipated initial public offerings ever.
While it's okay to offer a congratulatory happy anniversary, it's been anything but a honeymoon for the company and investors.
Some 421 million shares were sold, raising $16 billion, giving Facebook a whopping $104 billion valuation.
Then the disastrous story began: Shares were priced at $38, opened at $40, and then, within 10 market hours after the pricing, Facebook stock flailed. Technical glitches at the Nasdaq caused a delayed open, late executions and reports, and mispriced trades.
Lawsuits are still pending.
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.
A Facebook phone could be in the works, serving as the company's latest bold attempt to increase revenue and make money from its one billion users.
The social media giant sent out invites last week to a press event, "Come See Our Home on Android." Facebook Inc. (Nasdaq: FB) will host the event at its Menlo Park, CA headquarters Thursday.
Rumors state the mobile device will use customized software that's a version of Google Inc.'s (Nasdaq: GOOG) Android 4.2 OS. The software will dominate a user's home screen. Updates and information from a user's Facebook account will be posted constantly.
Industry insiders believe the company is working on the smartphone in collaboration with Taiwan's HTC. This is the second time the companies have collaborated on a Facebook-focused phone - with the first attempt only lasting a few months.
Could it be that second time's the charm?
LinkedIn Corp. (Nasdaq: LNKD) just reported fourth-quarter earnings that blew away Wall Street estimates, a nice addition to its already impressive resume -- and one that is making LNKD much more attractive than Facebook stock.
LinkedIn earned 35 cents a share, nearly triple the 12 cents earned in the same quarter a year ago. Net income soared 60% to $11.5 million, up from $6.9 million. Revenue jumped 81% to $304 million up from $168 million. Analysts were looking for 19 cents on revenue of $280 million.
U.S. markets accounted for 62%, or $189 million, of Q4 revenue. That was down 2% from the previous quarter. But international growth was robust, kicking in $114.6 million to LinkedIn's bottom-line.
CEO Jeff Weiner called 2012 a "transformative year."
"We have exceeded our own expectations by a wide margin," CFO Steve Sordello said during a conference call.
Shares surged $12.11, or some 10%, to $136.20 after hours Thursday following the report. The rally continued Friday with shares climbing another $26, or almost 21%, hitting an all-time high of $150.25 intraday.
Since its May 2011 initial public offering at $45, shares have more than tripled.
Facebook (Nasdaq: FB) stock has staged an impressive rebound in recent months after the company's disastrous IPO.
Since mid-November, the social networking giant's stock has gained more than 68%, going from a near-low of $19 to more than $32.
Investors will be watching closely when Facebook releases Q4 earnings after close tomorrow (Wednesday) to see if the company can maintain its momentum.
Expectations are high, as a bevy of analysts have upgraded their outlooks for the stock, though it is still trading well below its IPO price of $38 and its high of $42.
Wall Street projections are for Facebook to report earnings of 15 cents per share on revenue of $1.52 billion.
Now, chatter is swirling that CEO Mark Zuckerberg should step down and let a more experienced executive take the helm.
"There is a growing sense that Mark Zuckerberg, talented though he may be, is in over his hoodies as CEO of a multibillion-dollar public company," Sam Hamadeh, head of research firm PrivCo, told the Los Angeles Times. "While in many cases a company founder can, and does, grow into the job, things are happening so quickly that there is precious little time here for Zuckerberg to do that."
Fueling the sentiment is Facebook's steady descent since its calamitous IPO. On Thursday, as the first lockup period ended, which allowed early investors and venture capitalists to unburden their portfolio of battered shares, the stock hit a fresh low.
Facebook's shares closed Thursday at $19.87, a far cry from its debut price and peak of $45 a share.
Some tech pundits think that because Apple (Nasdaq: AAPL) has so much cash -- $117 billion as of the June quarter - and lacks a presence in social media, buying Facebook (Nasdaq: FB) just makes sense.
Those with more level heads think such a move would be a spectacularly bad idea -- and extremely unlikely.
"I can see Microsoft making a stupid decision like this but not Apple - MSFT has a history of overpaying for questionable assets, being late to the game and having lost what truly innovative mojo they had under [CEO Steve] Ballmer's watch," said Money Morning Chief Investment Strategist Keith Fitz-Gerald.
"I think Apple knows that the Facebook model is kaput and that it's not profitable - very similar to Google in that regard, which has held off from really rolling out Google+," Fitz-Gerald added."Shareholders would revolt...and so would the institutional money."
But Apple Chief Executive Officer Tim Cook has strongly hinted at a cozier Apple-Facebook relationship.
Calling Facebook a "great company" at the D10 conference in May, Cook said, "We have great respect for them. I think we can do more with them. Just stay tuned on this one."
Why Apple (Nasdaq: AAPL) Will Not Buy FBFacebook's shaky business model isn't the only reason Apple would shy away from buying the social media giant.
They were agitated by an article I wrote in May explaining why the world's most hotly anticipated IPO, Facebook (Nasdaq:FB), was worth a mere $7.50 a share at best.
"Out of touch," one of the critics said. A "luddite" charged another.
"Doesn't grasp the significance of so many users," one Wall Street insider opined--who happened not coincidentally to work for one of Facebook's investment bankers.
Since then the social media darling has fallen another 31% to nearly $22 a share. Ten weeks later, Team Hoodie hasn't done much to merit an upgrade either.
Sorry guys...Facebook is still only worth $7.50 a share - likely less.
The Cold, Hard Facts for FacebookAt the time I reasoned that Facebook's valuation simply didn't merit the 100 times earnings IPO price of $38 a share based on comparable figures from Google (Nasdaq: GOOG) and Apple (Nasdaq: AAPL).
But there were a host of other factors as well.
I cited falling revenues, a lack of control over the mobile market channel, increasing distrust from customers who were voting with their feet and the concurrent departure of major advertisers like GM which will cost Facebook an estimated $10 million a year in revenue alone.
I also posited the assumption that Facebook would be unable to maintain the 100% plus growth that many investors believed was baked into the proverbial cake.
Google couldn't. Apple couldn't. And both of them are real businesses.
That's the key...real businesses.
Fact is, Facebook still hasn't figured out what it wants to be when it grows up.
Despite the fact that CEO Mark Zuckerberg does have some excellent advisors, the company isn't going to be able to hide the fact that its "business" is nothing more than a colossal time-wasting collection of personal interest items for much longer.
Other problems abound, too. All of them point to a lower share price.
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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.