Monday, July 30, 2012

Things Getting Worst for Facebook Inc (NASDAQ:FB) Despite In Line Earnings – FB, ZNGA, YELP, P

Shares of Facebook Inc(NASDAQ:FB) ended the past week with a loss for the third straight week as the stock slumped another 17.50% and made another record low of $22.28, but ended the week bit higher at $23.70.

In brief, there is no support to the stock and it could fall where investors want to take it as the stock went into the free fall mode despite in line results. Unlike other big companies, the only concern markets have is the company didn’t provide earnings guidance. This was the company’s first ever public reported earnings and which was not at all impressive in any terms.

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The company’s earnings of 12 cents a share in the second quarter and revenue of $1.15 billion were almost in line with average analysts forecast of 12 cents a share on revenue of $1.15 billion.

Shares of FB had already been under selling pressure on concerns over the company’s failed strategy to monetize its ad revenue from the mobile users, where the number of users has started picking up significantly. There is no doubt that the company needs to come out with an effective strategy to attract more advertisers targeting mobile users, if not then the stock may continue to plummet.

In May, the stock went public and hopes were quite high only on the basis of the company’s mass users- almost 1 billion mark. However, only building users base is not sufficient for the company, they need to monetize in a better way to impress its investors as well as advertisers

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Shares of the company ended lower by 11.70% on Friday followed by a fall of 8.50% in prior trading session after Zynga spooked investors by trimming its earnings guidance.

Speaking about other social media stocks, things were not quite good too there, Yelp Inc(NYSE:YELP) had seen a loss of about 19% in the past week, Pandora Media Inc(NYSE:P) lost over 5% - thanks to a bounce back of 7.20% in Friday’s session. Zynga Inc(NASDAQ:ZNGA) was the biggest loser and slumped as much as 36%.

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