Facebook Earnings: (FB) Stock Getting Hammered

Thursday is a crucial day for Facebook. The social media giant will report its first quarterly earnings as a public company in a conference call at 5 p.m., which will impact Facebook’s stock price and measure how successfully it has monetized the business so far.  

Facebook’s stock price has plummeted from $38 to $26.94 since its highly-anticipated IPO in May, one of the most disappointing IPO’s of all time. Weak mobile phone strategy and doubts about the ability to expand advertising have brought down Facebook’s stock price. Analysts say the Q2 earnings report will reflect Facebook’s real value and future revenue potential.

PolicyMic will be reporting on the earnings report live. Bookmark and refrsh this page for updated information:

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Friday 3:30 pm: With 30 mins to go before the closing of the trading day, the FB stock is at $23.70, down 11.57%. Crushing.

Friday 11 am: Facebook, the horror. FB is hitting an all-time low after the company reported earnings that were, before one-time charges, in line with expectations.

But, the company’s growth is slowing sooner than expected, and this is something that worries investors. And even if the market could get comfortable with more modest growth

... if it could be OK with the fact that social media has become a hub for development and commerce and that Facebook has the best, most widely used platform for all of that ... there is an equally big problem that the company has to tackle. Mobility. 

This is how Andreas Pouros, over at Greenlight Digital, put it: “If a Facebook phone is now not on the cards, Facebook remains without a solid answer to its mobile problem. 

New ad formats have been and will continue to be launched by the company for mobile users, but there is a serious question over whether Facebook can integrate a compelling advertising offering on the smallest of screens which users will be comfortable with and that does not interfere with their Facebook user experience. Suffice to say, yesterday’s earnings call shows Facebook to be a great company that can make lots of money, but in the mobile battle, Google and Apple remain far ahead of the pack.”

5:20 pm: The stock is now down to 24.05 in after-hours trading.  IPO investors have now lost over 36% since purchase. Crushing.

5 pm: FB, which went public in May with an eye-poppingly high valuation, reported on an adjusted basis a profit on revenue of $1.18 billion for its second fiscal quarter.

The company reported a quarterly loss of $157 million, which included one-time charges including some stock costs related to the accounting of stock awards amid the IPO. On that same basis, the company earned $240 million in the second quarter of 2011. Excluding the one-time costs, the company earned $295 million or 12 cents a share, which was roughly in line with analysts' estimates.

Facebook shares, which closed at $26.84, fell more than 8% in after-hours trading following the earnings release.

It's the first quarterly report for Facebook as a public company.

4:55 pm: FB stock closes $26.88, down $2.50. The earnings report is due in at 5 p.m. 

3 pm: Investors fear that Facebook earnings may be low, as online game creator Zynga reported disappointing earnings on Wednesday. Zynga, which created FarmVille, fell short of the $337 million predicted by investors in the second quarter. On Thursday, Zynga’s stocks fell 40%. The disappointment is an ominous sign for Facebook’s earnings report, as Zynga produces 15% of Facebook’s revenue.

As Dan Patrick said in his Term Sheet newsletter: "If you were freaked out about Facebook before .... Zynga’s results might be pretty upsetting. The company said that revenue grew by 19%, far below the previous quarter’s 32%, that it lost 3 cents a share, and that it was lowering its full-year outlook. Zynga shares plummeted by about 40%. Since a portion of Facebook revenues come from Zynga, the social network's shares were down about 7% in early trading."

Whatever the numbers may be, CEO Mark Zuckerberg must say something about the company’s strategy to develop its business. With 900 million users, Facebook’s growth rate is slowing down in the U.S., its primary market. The company did not communicate a robust plan for expansion when it offered shares in May, so it must do so now.

We will provide live updates during the day about developments with Facebook’s earnings report, as well as Zynga’s and Facebook’s stock prices.