Facebook posted their first earnings report on Thursday as a publically traded company and achieved results that disappointed Wall St. estimates, sending its shares down over 10% in afterhours trading, a new all time low.
Facebook had revenues of 1.18 billion or 32% growth in the second quarter, exceeding estimates of 1.15 billion from Reuters analysts but still less impressive than the earlier quarters, registering as the slowest pace of revenue growth for the company since the first quarter of 2011.
Payment related sales were $192 million, below estimates.
Facebook had a net loss of 157 million or 8 cents a share in 2Q after taking large stock compensation related to its IPO which saw 16 billion raised.
If the compensation charges were not included in the earnings report, Facebook would have earned 12 cents a share, in line with Wall St. estimates.
Following a circus like IPO in May that witnessed the Nasdaq halting the trading session, finger pointing, and non-stop questions about the company’s rich valuation of 104 billion, many investors today are left wondering exactly what comes next for the world’s largest social networking site that was first created inside a Harvard dorm bedroom and has captured the hearts and imagination of the world.
Shares of Facebook are down 29% since the IPO.
Investors want to know if Facebook’s nearly billion online users can help the company to consistently grow revenue and prove to Wall Street that there is still more upside ahead.
Twenty eight year old CEO Mark Zuckerberg raised some eyebrows across Wall Street before the IPO after he refused to temporarily shed his trademark hoodie while meeting with well dressed Wall St. investment bankers who funded his grand social networking experiment.
Zuckerberg has made it known that his social media project with Facebook is primarily intended to help transform the world.
Facebook investors are hoping that Zuckerberg will maintain his philosophical zeal to transform the world while also keeping his attention fixated on the balance sheet which shows decelerating quarterly revenue growth and a changing Internet landscape that is increasingly shifting to mobile, an arena and that Facebook has been slow to integrate and monetize.
CEO Mark Zuckerburg shared his vision for mobile with investors during yesterday’s conference call.
“Mobile is a huge opportunity for Facebook,” Zuckerberg said.
“Our goal is to connect everyone in the world. And over the next five years, we expect 4 or 5 billion people to have smartphones. That’s more than twice as many people as have computers today.”
Some investors believe that Facebook can successfully shift their large international business model to mobile and generate more revenue each quarter.
Mark Hawtin, Investment Director from Gam, told host Linzie Janus on Bloomberg’s Countdown that Facebook’s quarterly results were better than expected, particulary in advertising revenue. “We think that they beat most key line items” Hawtin said.
Hawtin believes that there is a credibility issue holding Facebook back along with large doses of negativity.
“I think the problem is credibility. The market is looking for every opportunity to try and slam them” he said.
Hawtin explained that Facebook has premier online real estate that can become monetized.
“They will find a way of monetizing users” he said. Hawtin noted that companies like Spotify and Trip Advisor could be paying Facebook more money in the future.
He said that 30% of Trip Advisor’s revenue is generated by users who login via Facebook.
“In time Facebook will be able to charge for that and monetize that in the future” Hawtin said.