Facebook (Nasdaq: FB) Stock Zooms – But Don't Let Earnings Fool You
Facebook (Nasdaq: FB) stock is up more than 30% today as investors applaud the second-quarter earnings report released yesterday (Wednesday).
Investors were thrilled to see FB earnings improve from previous disastrous quarters, and their exuberance pushed Facebook stock above $30 a share for the first time since January.
But, before you think FB stock is now the hottest investment of 2013, take a closer look at what's going on...
Facebook (Nasdaq: FB) Earnings: It's All About Mobile
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 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.
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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