NEW YORK (AP) — Facebook's
stock hit a new low Friday after it reported lukewarm second-quarter
results and didn't give an outlook for the coming months.
The stock fell $2.88, or nearly 11 percent, to $23.97 in afternoon trading Friday, after earlier trading as low as $22.28.
Facebook
Inc.'s initial public offering of stock priced at $38, and its low had
been $25.52, hit on June 6. The stock is now about 37 percent below its
IPO price.
Facebook issued its first financial report as a public company
after the market closed Thursday. The company reported slightly
stronger-than-expected revenue and a gain in user numbers, but investors
weren't impressed.
Although
revenue grew 32 percent in the second quarter, growth has slowed from
earlier this year and from previous years. That's a concern for a newly
public company. Investors are willing to value new companies highly,
even if they are not making a profit, because they expect booming
revenue.
Baird's Colin Sebastian also pointed out that the company is spending more on technology and hiring, driving up expenses.
But
he's not overly concerned. He backed his "Outperform" rating for
Facebook, saying advertising revenue was better than expected and the
company is improving its ability to make money from users who access
Facebook from apps on their phones and tablet computers.
Other
analysts remained positive, too. Of 27 analysts available from FactSet,
15 have "Buy" ratings or equivalent, while just three are a "Sell."
Analysts tend to have longer-term views of stocks than many day-to-day
investors.
Mobile and users in
developing countries are driving growth in active monthly users,
Sebastian said. Facebook had 955 million active monthly users as of June
30, up 29 percent from a year ago.
"We don't view these results
as dramatically good or bad," said Citi analyst Mark Mahaney. "Key
questions remain: the future of Facebook mobile monetization and the
future of Facebook user engagement."
Analysts
also cautioned that the stock could be volatile because Facebook didn't
offer investors and financial analysts its outlook for the rest of the
year.
Overall the company
reported a loss of $157 million, or 8 cents per share, in the April-June
period, mainly because of compensation expenses it incurred when it
paid $1.3 billion in restricted stock and related taxes for employees as
part of the IPO. The loss compared with earnings of $240 million, or 11
cents per share, in the second quarter a year ago.
The company's adjusted earnings of $295 million, or 12 cents per share, matched Wall Street's expectations.
Facebook's revenue of $1.18 billion was slightly higher than the $1.16 billion expected by analysts surveyed by FactSet.
The
results came two months after Facebook's stock flopped on its first
trading day, on May 18. The day began with glitches with the Nasdaq
Stock Market that delayed trading by half an hour. It didn't get much
better from there. Despite months of hoopla that had investors thinking
it would soar, the stock closed just 23 cents above its $38 IPO price.
It has not reached that level since.
Investors
were holding out hope that Facebook would far exceed expectations —
even though the company effectively warned investors before its IPO that
Wall Street's expectations were too high. In a filing issued a week
before its IPO, for instance, Facebook said its mobile users are growing
at a faster pace than the number of ads on its mobile platform.
Analysts
took that as a sign that their estimates were out of whack and many of
them reduced their estimates for Facebook's projected revenue and
earnings.
Even though the
number of people who use mobile devices and tablet computers to access
Facebook had been growing fast, Facebook didn't start showing ads on its
mobile app until this spring. Facebook had 543 million active monthly
mobile users at the end of the quarter, a 67 percent increase from a
year earlier.
In a conference
call with analysts Thursday, CEO Mark Zuckerberg said Facebook's mobile
users are more active than those who use the personal computer version.
"On
average mobile users are around 20 percent more likely to use Facebook
on any given day," he said. "So mobile not only gives us the potential
to connect more people with our services and also gives us the ability
to provide more value and more deeply engaging experience."
Facebook
said its revenue from advertising totaled $992 million, a 28 percent
increase from the same quarter last year. That number accounted for 84
percent of total revenue. The company did not say what portion was from
mobile advertising. The rest came from payments and other fees, money
Facebook makes from Zynga games and other apps.
___
AP Business Writer Bree Fowler contributed to this report.
