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.
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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.
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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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.