Investors are sharing their feelings about Facebook following the company’s first quarterly earnings reports since it went public, and they are not happy: the stock price tumbled from a high of around $29 earlier this week to $23.06 at the time of writing – a 20.5% drop over four days, with most of the decline coming in the last day or so.
The decline is even more precipitous compared to the original IPO price of $38: since its debut in mid-May, Facebook’s shares have declined 39.3%. Meanwhile the company’s total market capitalization has halved from around $100 billion to around $50 billion. In short: taking the investment world by storm it is not.
The reasons for the latest round of declines are plain to see: while it met revenue expectations, pulling in $1.18 billion, it posted a $157 million loss, and questions persist about its strategy, such as it is, to monetize the growing number of users who access the site via mobile devices.
Mark Zuckerberg also nixed the half-baked idea of a “Facebook phone,” which, despite being sort of silly, was probably propping up the stock’s value in the minds of some (desperate) investors.
And of course everyone remembers that General Motors dumped Facebook like an ugly ex right before the IPO, highlighting questions about the efficacy of Facebook advertising, and with it the site’s basic business model.
This is not to say the news is all bad. The new Facebook Exchange, which will allow real-time bidding on ad inventory, could boost advertiser interest and spending with new flexibility and maybe even some -- dare to dream -- improved targeting and reporting of ad results. And Facebook remains the world’s dominant social network by a huge margin, as it creeps up on one billion users worldwide.
But even here there are some worrying signs, including a marked slowing, and maybe even reversal, in the company’s U.S. growth rate. According to comScore, the number of average monthly unique U.S. visitors fell from 163.7 million in July-December 2011 to 161.1 million in the first four months of 2012 – a 1.6% decline.