Facebook beat fourth-quarter earnings and revenue estimates, and improved mobile ad sales, but investors weren't all that impressed.
Facebook (FB) stock tanked 10% within minutes in after-hours trading following the earnings release. But the stock nearly fully recovered before edging lower again as CEO Mark Zuckerberg, CFO David Ebersman and COO Sheryl Sandberg answered questions from analysts on a conference call. Shares were down 4% at the conclusion of the call, trading just below $30 a piece. Facebook finished the day's regular trading up almost 1.5% to $31.24.
The results and the stock reaction lit up that other big social networking site: Twitter.
Revenue from mobile advertising represented about 23% of total ad revenue during the fourth quarter, the company said. That's an improvement from 14% in the third quarter. Prior to that, Facebook had practically no mobile revenue.
Though mobile advertising revenue increased, the growth of mobile users slowed. During the fourth quarter, monthly active users of Facebook's mobile app rose by 57%, down from a 61% growth rate in the third quarter and 67% in the second quarter.
crazy to see acceleration of mobile usage at $fb -- but growth rate of revenue per user is worrisome…—
Matt Lauzon (@mattlauzon) January 30, 2013
Still, Zuckerberg cemented the social network's direction, noting that "there is no argument today. Facebook is a mobile company." And he thinks that's a really good thing.
Zuckerberg: we'll be able to make more money from each minute people spend on mobile devices $FB—
Julia Boorstin (@JBoorstin) January 30, 2013
But some users quipped that Facebook's ad strategy could impact the overall user experience of the social network.
Can't wait till $FB is just one giant advertisement.—
Elvis Cake (@ElvisCake) January 30, 2013
$FB is AOL without subscription, just increasingly annoying ads that will slowly drive users away.—
Ryan (@MrRyanOz) January 30, 2013
While Facebook didn't provide formal guidance for the year, Ebersman warned that the company's expenses will rise throughout the year as it expands its workforce.
Ebersman: Plan to hire aggressively in 2013. Total expenses excluding stock comp will likely grow around 50% in 2013 $FB—
Chris Ciaccia (@Commodity_Bull) January 30, 2013
Ebersman also noted that Instagram, which Facebook purchased last year for $1 billion, is continuing to grow rapidly.
Ebersman running through financials, which don't include Instagram. He says Instagram is growing "at an impressive rate." $FB—
Julianne Pepitone (@julpepitone) January 30, 2013
Zuckerberg was also optimistic about the site's newer features, including Gifts and Graph Search, but doesn't expect them to be big money makers right away.
Zuckerberg: want to "temper expectations" for revenue from Graph Search, gifts $fb—
Erica Fink (@ericafink) January 30, 2013
Oh snap. Zuckerberg: "Our relationship with Google isn't one where the companies really talk." $FB—
Julianne Pepitone (@julpepitone) January 30, 2013
"I'm really happy with the partnership we have with them" -- Zuck, re: Apple. $FB—
Sam Gustin (@samgustin) January 30, 2013
Though Zuckerberg and team continued to stress the the company has improved and remains focused on its mobile strategy, Facebook shares declined 4% Wednesday evening.
keep talking zuck, wallstreet isnt buying what youre selling yet... $fb $$—
reuven ohr (@reuvenohr) January 30, 2013
But some investors are willing to sleep on it and wait to see how the stock performs Thursday.
Yikes $FB - This is why I dont mess with earnings. We shall see how this looks tomorrow morning—
Maximus Burns (@MaximusAnalysis) January 30, 2013
Many of Facebook's rank-and-file employees got their first chance to dump their shares Wednesday as U.S. financial markets opened for the first time this week.
Shares of Facebook (FB) declined more than 4%, as a total of 234 million shares became newly eligible for sale. About 50 million Facebook shares exchanged hands in the first hour of trading.
For many of Facebook's employees, whose so-called restricted stock units (RSUs) converted to common stock last week MOREHibah Yousuf - Oct 31, 2012 11:20 AM ET
Yelp (YELP) shares jumped nearly 10% Wednesday after the company, which provides user-generated reviews of local businesses, announced plans to buy a European rival.
The rally came as companies across the social media "ecosystem" basked in the glow of Facebook's second quarterly report as a public company. Facebook's third-quarter earnings topped forecasts, and investors were impressed with the social network's ability to make money off users that access the social network MOREBen Rooney - Oct 24, 2012 12:56 PM ET
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