A loss in the second quarter, slowing revenue
growth and share compensation costs sent social network, Facebook Inc’s
(NASDAQ:FB) shares plunging, after the company announced its first-ever
results.
The stock extended losses to below $23.50 in pre-market
activity after closing down 8.5 percent at $26.84 on Thursday, declining over 38
percent from its debut in May. The company also did not offer any future
guidance, disappointing investor expectations and eroding confidence.
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Facebook reported net loss of $157 million, or
8 cents a share, in the second quarter its bottom-line hit by stock
compensation charges incurred by its IPO. In the year-ago period the company
had reported net income of $240 million, or 11 cents. Eliminating one time
charges, Facebook said it earned 12 cents a share, matching analysts’ forecast.
Revenue in the three months ended June 30 was
$1.18 billion, compared to $895 million in the year-ago quarter.
Monthly active users rose to 955 million at
the end of June from 901 million in March. But with more users migrating to
mobile devices there has been a surge in mobile users, rising 67 percent on
year to 543 million users.
While mobile user base has seen a steep
increase, mobile advertising has not kept pace with it, adding to investor
concerns about the company being able to sustain its revenue growth. Analysts
have also been questioning its valuation and feel that the plunging shares
reflect the reality of the company's intrinsic value.
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Chief Executive Mark Zuckerberg commented that
the company had a clear path to building a strong mobile business, though he
did not provide more details.
Since social media companies have very few
benchmarks, being a recent phenomenon, the analyst community is also wondering
how the company will be able to make money from it billion or so users.
Facebook's capital expenditures more than
tripled to $413 million in the second quarter.
Bloomberg had reported on Thursday that
Facebook was working with HTC to build a smartphone to take advantage of the
popularity of mobiles. However Zuckerberg dashed these hopes saying that it did
not make sense for his company to get into hardware.
Seattle-based Starbucks Corporation’s (NASDAQ:SBUX) net
income rose 19 percent during the quarter, earning $333.1 million, or 43 cents
per share.
Total revenue rose 13
percent to $3.3 billion. Analysts had estimated profit at 45 cents per share on
revenue of $3.34 billion.
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Revenue growth was led
by sales in China and Asia, though its European sales remained flat.
Starbucks cut its
profit outlook to 44 cents to 45 cents per share for the current quarter from a
range of 46 cents to 47 cents per share. Analysts were predicting 48 cents per
share.
Shares fell by 10.10%
to $47.02 in pre-market session.
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