Q2 Preview: Facebook (FB) Looks Shaky into First Quarterly Report; Will It Continue Playing Games, or Get Serious?


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Shares of Facebook (Nasdaq: FB) are currently being unfollowed (wrong social media platform?) heading into its first-ever quarterly report since going public on May 18th . After the market closes Thursday, Facebook will announce second-quarter 2012 results.

Current analyst expectations see Facebook reporting earnings of 12 cents on revenue of $1.15 billion. Numbers are in-line with Estimize consensus views calling for EPS at 12 cents and revs of $1.15 billion.

Heading into the print, there are a couple of key points. First, the stock is currently down 28 percent from its IPO pricing level at $38 and 35 percent from its actual opening price of $42.05.

Second, shares have been pressured due to evaluation and re-evaluation of Facebook's mobile initiative. With AT&T ( T ), Verizon ( VZ ), and Sprint ( S ) continuing to sell more and more smartphones, investors are clamoring to see how Facebook will be able to monetize ad space in the mobile arena. So far, consensus has been reserved, at best.

Finally, Zynga (Nasdaq: ZNGA) issued strong second quarter results a dour quarterly report with guidance that would make a koala weep. Given that Zynga is still largely tied to Facebook (accounting for about 15 percent of Facebook's revenue at last check), the miss and lowered outlook was a big one. That's largely why Facebook is off 6.6 percent Thursday.

Others will also be paying attention to the alleged "Want" button, which will signal Facebook's larger venture into consumer retail.

Analyst Comments

  • Goldman Sachs took the spearhead following the Zynga report late Wednesday. The firm sees Zynga contributing $104 million to Facebook's payments revenue in the second quarter, which is $12 million below what it could have contributed should it have reached consensus views. Worst case, Goldman sees Facebook falling $12 million to $15 million short in this segment, though the firm sees the possibility of coming in at the high-end about equal as in-line given "non-Zynga games would need to contribute $94mn vs the $87mn we estimate for 1Q12." In total, the Street is looking for Facebook to report $198 million in payments revenue.

    Goldman sees a loss of 29 cents in the quarter.

  • JPMorgan is looking for revs of $1.105 billion and EPS of 11 cents. The firm is also modeling 958 monthly active users (MAUs) and 565 million daily active users (DAUs), with strong growth in Asia, rest of world, and mobile. Revs-per-MAU might come in at $1.19, which would be a 2 percent drop from last quarter.

    Whether Facebook will provide financial guidance is unknown, but JPMorgan sees Facebook issuing an update on strategies related to mobile and Sponsored Stories, as well as growth of its ad platform.

    JPMorgan also commented, "We think the FB Ad Exchange could become a meaningful driver of revenue growth on Facebook which could lead to share shifts in the display industry in 2013."
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Facebook's past performance at Streetinsider's Facebook's Income Statement .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Earnings , Stocks
Referenced Stocks: FB , S , T , VZ , ZNGA

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