Facebook Q2 2012 Earnings Meet Analyst Predictions, But Shares Plummet
July 27, 2012 11:29 AM
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Facebook posted $1.18 billion in Q2 2012 revenues and a net loss of $157 million (8 cents per share)
Facebook's first financial earnings report since going public in May was pretty good, but failed to impress investors. The social networking giant posted $1.18 billion in Q2 2012 revenues, which was a 32 percent jump from Q2 2011. This figure modestly passed analyst expectations of $1.15 billion in revenues.
However, Facebook did report a net loss of $157 million (8 cents per share), which fell from $240 million (11 cents per share) in Q2 2011. This was likely due to the $1.3 billion the company paid in compensation regarding stock-based pay after the initial public offering (IPO) in May.
After adjusting to figures to exclude those costs, Facebook earned a profit of 12 cents per share, which was right in line with analyst expectations.
Facebook shares are currently
down over 12% to $23.45
, which is roughly 40 percent below the initial
IPO price of $38 per share
"Our goal is to help every person stay connected and every product they use be a great social experience," said Mark Zuckerberg, Facebook CEO. "That's why we're so focused on investing in our priorities of mobile, platform and social ads to help people have these experiences with their friends."
Facebook CEO Mark Zuckerberg [Image Source: Associated Press]
Facebook's IPO in May was the largest,
valuing the social giant at over $100 billion
. However, the situation took a dive when shares were trading way below their initial price. In just a two-day span after the company went public, its shares plunged a total of 19 percent.
Morgan Stanley, Goldman Sachs Group Inc. and JPMorgan Chase & Co. are being sued in a Manhattan federal court by investors who claim that they were lied to about Facebook revenue forecasts before purchasing stock. Other underwriters, like Bank of America Corp. and Barclays PLC, as well as Facebook executives, are being sued as well.
According to reports, underwriters had like Morgan Stanley had selectively shared Facebook estimates, leaving out certain details that would have possibly changed investors' minds. Morgan Stanley reportedly cut its revenue forecasts for Facebook only days before the IPO launched, yet failed to let investors in on the changes. This
from the U.S. Securities and Exchange Commission (SEC) as well as the Financial Industry Regulatory Authority (FINRA).
While Facebook may be having some financial issues right now, it's looking ahead to new ventures that could potentially help the company. For instance, it was reported yesterday that
a new Facebook phone is expected to launch in mid 2013
. However, Facebook CEO Mark Zuckerberg
shot down those reports in an
The goal is to make money on mobile phone advertisements since Facebook had $3.15 billion in total advertising sales last year, but none of this came from ads on mobile devices.
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7/27/2012 1:24:50 PM
Apple also paid emphasis on its products when SJ was on board but it worked out well for them.
"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation
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