Facebook Stock

Facebook Earnings Report Gives Investors Zero Reasons to Stick Around

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.

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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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Facebook Earnings Report: Three Things to Watch

The Facebook earnings report due out Thursday is sure to bring excitement to this otherwise slow summer earnings season.

Facebook Q2 earnings will come out after market close Thursday, in the Menlo Park, CA-based company's first report since going public.

There is no doubt that Facebook (Nasdaq: FB) would love to put its fiasco of an initial public offering behind it. But since the company's disappointing IPO was marred by technical glitches and concerns about its valuation, Facebook will be under intense scrutiny.

Analysts polled by Thomas Reuters expect Facebook Q2 earnings of 12 cents a share on revenue of $1.1 billion. Those are the minimum numbers needed to hit the lofty $100 billion valuation Facebook claimed it was worth when it debuted on May 18.

Since expectations have been lowered, analysts think Facebook earnings will hit the Q2 target.

"We think it is unlikely that Facebook will miss Q2 consensus estimates, which dropped after May 9's revised Form S-1," investing firm Wedbush said in an earnings preview report on the social network. "The underwriters likely advised Facebook to beat Street expectations for its first public quarter; this became more achievable now that estimates have declined."

Just as important as the numbers will be if Facebook delivers answers to all the questions that shareholders have been dying to ask.

Here are the three things- besides how Facebook stock reacts - you should watch when the Facebook earnings report comes out Thursday.

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What to Look for in the Facebook Earnings Report

The most highly anticipated earnings report this month will come July 26 when Facebook (Nasdaq: FB) releases its first results as a public company.

While the event won't garner the same kind of fanfare Facebook enjoyed leading up to its IPO, the projected numbers are already attracting a great deal of negative attention, and Facebook stock has fallen in the midst of some dreary expectations.

According to data from Bloomberg News, Facebook is forecast to report revenue of $1.16 billion, while profit is expected to have fallen 10% to 11 cents a share amid a slowdown in sales. The whisper number is for earnings of 12 cents a share.

Predictions for the company have been slashed in recent weeks as concerns of a slowdown in sales and user defections have increased.

Those cuts have weighed on Facebook stock. Shares on Tuesday slipped for the sixth consecutive day, eked out a small gain Wednesday, and were lower again today (Thursday).

"People are concerned about the growth profile. More risk is being reflected in the lower stock price," Benjamin Schachter, an analyst at Macquarie Securities USA Inc., told Bloomberg.


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You Might be Invested in Facebook Stock and Not Even Know it

Investors who boast that they were smart enough to avoid the hype of investing in Facebook (Nasdaq: FB) stock might want to check their mutual funds' holdings before relishing in their bravado.

According to data compiled by investment research firm Morningstar for The Wall Street Journal, some 160 U.S.-based mutual and exchange-traded funds bought shares of Facebook in May. And since only some fund companies choose to reveal their holdings on a monthly basis, the ones that chose to invest in Facebook will be disclosed over the next two months as fund companies file quarterly reports.

"Even if John Q. Public didn't buy [Facebook] directly, he may own one of the hundreds of mutual funds that did," Geoff Bobroff, a mutual fund consultant in East Greenwich, RI, told The Journal.

What is notable in many cases about the purchases, including those by lead underwriter Morgan Stanley (NYSE: MS), is that some of the funds that purchased shares wouldn't normally invest in a high-growth technology company like Facebook. And some wouldn't invest such a high percentage, like Morgan Stanley that had at least seven funds with over 5% of portfolio holdings in Facebook stock.

"That's a huge gamble," Michael Kalscheur, a financial planner with Castle Wealth Advisors LLC, told The Journal. "Are you really going to put an IPO as a top-five holding in a fund?"

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How to Trade the Obamacare Ruling

During a visit today (Wednesday) to Fox Business' "Varney & Co." program, Money Morning's Keith Fitz-Gerald tackled the issues surrounding the Obamacare ruling and how investors can trade the news.

Since the U.S. Supreme Court is scheduled to announce its Obamacare ruling tomorrow, we wanted to share with you this Q&A session with Keith on what you need to know about the decision.

Keith also shared what he thinks of Facebook stock as the market is flooded with analyst opinions from the underwriting firms.

You can see all of Keith's analysis in the video below.

Q, from "Varney & Co." host Stuart Varney: The Obamacare ruling is imminent. Will insurance companies tank if it's repealed, and how would you trade that?

A, Keith Fitz-Gerald: I can see this going two ways...

1)If it's upheld, insurance companies will make bank, but businesses offering services to small and mid-cap companies that are likely to be hamstrung are going to do better. That includes Paychex Inc. (Nasdaq: PAYX) or Express Scripts (Nasdaq: ESRX), for instance. Both will help small companies spend their healthcare dollars more efficiently.

2)If struck down, big insurance companies will have to retool and restructure as they are the ones that hold the biggest stake in this debate. It's a little late to make that bet today, but when the ruling is announced we'll have some clarity and can make a decision then.

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Analysts Weigh in on Facebook Stock as Quiet Period Ends

Investors who want more analyst opinion on the Facebook stock price now have a lot more reading to do.

Today (Wednesday) marked the end of a 40-day quiet period for dozens of analysts who work for the 33 underwriters of the Facebook (Nasdaq: FB) initial public offering. That means these analysts now have released their first opinions and outlooks for shares of the social networking behemoth.

In an effort not to artificially inflate the stock price of a "hot" IPO, major Wall Street firms are prohibited for the first 40 days following a stock's debut from issuing analyst reports on stocks they underwrite. Smaller banks that are part of such an offering usually follow suit.

The universal opinion prior to Wednesday's Facebook releases was that the majority of analysts would "like" FB shares, and predict a 20% rally or more could be expected over the next 12-month period.

That was mainly the case among its lead underwriters, although some were bearish, bringing the average price target down. Price targets for analysts who provided them Wednesday ranged from $25 to $45, with the average $37.71.

But investors should consider the source before acting on the first analyst opinion they see. Some may be more interested in getting attention than guiding investors in the right direction.


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Why the Facebook Stock Price is Up

Over the past several days, the Facebook stock price has done a stark about-face.

In fact, Facebook (Nasdaq: FB) shareholders just might get the pop in price they have been hoping for ever since the social media giant debuted May 18.

Worries that Facebook's shares were overvalued and concerns that the company would not be able to grow revenue fast enough had pummeled shares lower by as much as 32% from the May 18 IPO price of $38.

After a disastrous IPO and a dismal showing in the weeks that followed, shares of Facebook are finally showing real signs of life. The tide may be turning.



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Why Facebook Stock Could Get a Boost from New Ad Strategy

Facebook (Nasdaq: FB) continues hunting for a major development that'll lure investors back to its stock.

In order to do that, it has to show it can appease both users and advertisers. The world's largest social network, which has amassed some 900 million users worldwide, earned $3.15 billion from advertising in 2011.

But the Menlo Park, CA-based company has to attract more advertisers to its site since they've become disenchanted with Facebook's lagging mobile ad strategy.

Worries that Facebook's ad revenue growth is not moving in tandem with its explosive membership have weighed on the stock. Since going public on May 18 at $38 a share, Facebook stock has slumped 26%.

Recently, the company debuted mobile ads and other services to buoy sales, but investors remain skeptical that the efforts will successfully boost revenue.

"Facebook's been having challenges coming up with effective advertising. The company is hoping to use that inventory on the right side of the page to deliver advertising that is more targeted," Debra Aho Williamson, an analyst at eMarketer Inc., told Bloomberg News.

That's why the company is introducing Facebook Exchange.

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Will the Facebook Stock Price Overcome This Latest Concern?

Facebook (Nasdaq: FB) and its struggling stock price have been in the spotlight since the company's IPO, but rarely for good news. This week started no differently.

Besides its poor stock performance, Facebook already has been blamed for halting this year's IPO market. There hasn't been an IPO since Facebook debuted on May 17.

Facebook also is taking heat for wreaking havoc on Nasdaq's reputation after technical glitches marred Facebook's debut. Nasdaq revealed last week that it will pay out $40 million in compensation damages to brokerages that lost money during the IPO fiasco.

Finally, many investors claim they were misinformed on Facebook stock's first-day potential, and have initiated a class action lawsuit against the underwriters.

Now the most recent bad news has cast even more doubts over whether or not Facebook can perform as well as investors expected.

Has Facebook's Growth Reached a Ceiling?

Over the weekend The Wall Street Journal ran a report on Facebook's growth slowdown, especially in the United States.

Citing market research firm comScore Inc. (Nasdaq: SCOR), the report indicated unique visitors to the Facebook Website in the United States increased just 5% in April from a year earlier.

That was the lowest U.S. user growth rate since comScore started tracking the data in 2008. It compared very poorly to the data from the past two years, down from 24% growth in April 2011 and 89% in April 2010.

The amount of time Facebook users spend per month on the site increased, but also at a slower rate than before. Facebook users' time-on-site was up 16% from a year earlier, compared to a 23% increase in 2011 and 57% in 2010, according to comScore.

"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."

It may be a matter of numbers limiting Facebook's growth rather than a changed perception or heightened dislike of the company. Facebook is estimated to have already captured 71% of the 221 million U.S. Internet users, leaving little room for U.S. growth.

That is troubling as the U.S. accounts for approximately 56% of Facebook's 2011 ad revenue of $3.1 billion, according to the company's regulatory filings.

Morningstar analyst Rick Summer stated that Facebook cannot expect to have the same post-IPO growth as Google Inc. (Nasdaq: GOOG), due to the fact that Facebook already has a dominant market share of its industry and a very high number of Internet users.

Summer suggested that increased ad pricing could drive future growth.

"Facebook is already a dominant Web platform and they've got significant Internet penetration today," said Summer. "Ad pricing is clearly going to be where their growth is going to come from."

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Facebook IPO Fiasco to Cost Nasdaq $40 Million

The Facebook IPO mess has become a costly ordeal.

After market close Wednesday the Nasdaq OMX Group announced it will pay $40 million in compensation damages to brokerages that lost money because of the Facebook (Nasdaq: FB) IPO fiasco.

Facebook's epic debut on May 18 was marred by technical glitches at its home exchange, the Nasdaq. After a great deal of anticipation, a rock-star like roadshow, and repeated SEC filings and re-filings, shares were finally priced at $38 each.

But there were problems from the first trades went off around 11:30 a.m. EDT. Executions were late, allotments askew, and prices delayed. Investors who did manage to get shares were disappointed when Facebook stock barely finished above the IPO price on its first day of trading, closing at $38.27.

Many investors felt misled and cheated. Scores have joined class action law suits against Facebook, Nasdaq, and the 33 underwriters.

But Nasdaq's recompense is being called a public relations ploy and does little to help individual investors.



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Facebook Stock Price Hits Low – Can this New Strategy Help?

After hitting a new low of $25.75 on Tuesday, Facebook (Nasdaq: FB) stock slid further Wednesday morning despite a nice rally for U.S. equities.

With the Dow up nearly 90 points right after the opening bell, Facebook shares edged down to $25.68 in early morning trading, reaching another new low. Shares now sit more than 30% below the IPO price of $38.

Weighing on Facebook Wednesday was news that the Nasdaq Omx Group (NDAQ) will tell brokers exactly how it will recompense investors for the myriad trading problems during the Facebook IPO frenzy. Problems at Nasdaq contributed to order issues that prompted several class action law suits.

But what drew more attention from investors was a comment by Ironfire Capital founder Eric Jackson. The analyst appeared on CNBC's "Squawk on the Street" program Monday and said that Facebook will lose its dominance as a social network in less than 10 years.

Jackson highlighted Facebook's inability to make leeway in the thriving and prominent mobile arena, as well as the stock's steady tumble since the company's epic IPO.

The comments have triggered suspicions that Facebook will suffer the same fate as MySpace, once the dominant force in the social networking circle, and Yahoo (Nasdaq: YHOO), once a leader in Internet search.

"In five to eight years they are going to disappear in the way that Yahoo has disappeared," Jackson said. "Yahoo is still making money, it's still profitable, still has 13,000 employees working for it, but it's 10% of the value that it was at the height of 2000. For all intents and purposes, it's disappeared."

Now Facebook has a new strategy to increase its reach - and its profits - but it's one that will likely raise some eyebrows.

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Facebook Stock Options: Bears Come out to Play

It's been an interesting ride so far since the Facebook stock options left the starting gate Tuesday.

Expected to hit the 400,000 contract mark on their first trading day, the options closed with a total volume of 369,478 contracts, according to The Options Clearing Corp (OCC). Only Apple Inc.'s (Nasdaq: AAPL) options had more trading volume than Facebook on Tuesday.

Unfortunately, the underlying Facebook (Nasdaq: FB) stock price wasn't as charming as it dropped under $29 a share for the first time Thursday. That's more than 23% below its IPO price of $38 on May 18.

The options market has highlighted investors' lack of faith in the Facebook stock price.

Put options, usually recognized as a bearish bet, give a holder the right to sell shares at a specific price by a certain date. Call options, on the other hand, are usually considered a bullish bet and give the holder the right to buy shares at a specific price.

In its first three days of trading, put volume has continued to outdo call volume. It appears that everyone is down on this stock.

Until Facebook stock stops falling, most investors remain too wary to buy.

"Short-term we are still cautious but there should be reasons for optimism later this year and next," Pivotal Research analyst Brian Wiesner told Reuters.

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Facebook Stock Options: Proceed with Caution

As Facebook (Nasdaq: FB) continues to try to save face after its IPO flop and the myriad mess ups that followed, investors now have a new way to trade the most talked about stock this year.

Options on the social networking giant started trading today (Tuesday) on the NYSE Amex. BATS Options Exchange will list options starting Wednesday.

So far, staying with the Facebook stock theme, investor interest has been high.

As trading began this morning, volume for puts exceeded calls by 1.29-to-1, according to data compiled by Bloomberg News. More than 62,000 puts, giving the right to sell, traded by 11 a.m. June $30 puts were the most active contracts, with volume at 10,974, followed by June $34 calls and June $32 calls.

"Facebook options, like the stock in its debut, post impressive first day volume so far," explained the Dow Jones' Kaitlyn Kiernan to The Wall Street Journal. "Facebook looks poised to become one of the most-traded corporate options today, with a total of 17,232 options - 7,476 puts and 9,756 calls traded in the session's first 15 minutes."

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