Facebook Inc (NASDAQ:FB) released its earnings report for the first three months of 2013 this afternoon, Wednesday, May 1, after the market closed. The company revealed that it earned $0.12 per share in the first three months of the year, on revenue of $1.46 Billion. On today’s market, Facebook Inc (NASDAQ:FB) stock trended down, closing at $27.43 per share.
In the run up to the release of this report, analysts following the social networking firm were looking for earnings per share of 13 cents, on revenue of $1.4 billion. In the first three months of 2012, Facebook Inc (NASDAQ:FB) managed to earn 12 cents per share on revenue of $1.05 billion. In the hours before the numbers were released, whisper numbers indicated that Facebook Inc (NASDAQ:FB) would report earnings slightly below the expectations of Wall Street.
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The big story in this earnings report was always going to be mobile. Facebook Inc (NASDAQ:FB) has been trying to respond to market pressures by monetizing mobile use. In the firm’s earnings report for the last three months of 2012, Facebook revealed that 23 percent of its ad revenue came from mobile, a move in the right direction, but investors remain nervous about the social network.
Since the start of 2013, shares in Facebook Inc (NASDAQ:FB) have risen by around 3.5 percent. The company’s stock is lagging major indexes like Nasdaq, which has grown more than 9 percent in the same period, and the S&P 500, which has grown by more than 11 percent since January 1. Investors seem confident that Facebook Inc (NASDAQ:FB) is going the right direction, but it seems that the company’s equity is too risky.
There are several risk factors built into the market that Facebook Inc (NASDAQ:FB) operates in, and some are specific to the company. The Web is a young industry and after so many investors were burned before, they may be nervous about just how “sticky” Facebook is. All tech investors are familiar with stories of the collapse of previous social networks.
Facebook Inc (NASDAQ:FB) itself has managed to do a lot to contribute to the distrust. The company’s IPO disaster remains fresh in the minds of investors who bought in at $38 per share, only to see their value decline more than 25 percent through today. Facebook Inc (NASDAQ:FB) shares are also trading at incredibly high valuations – in recent trading the firm’s 2012 P/E was over 1800.
Facebook Inc (NASDAQ:FB) will host an earnings call at 5.00 pm EST in order to discuss this earnings report.