NEW YORK: Facebook shares took a beating on Friday after uninspiring earnings in the first results since the much-hyped public offering of the world’s biggest social network. Facebook shares plunged 11.7% to end at $23.70 and are down more than 35% from the offering price in May of $38. The company reported a loss of $157 million in the second quarter, largely because of accounting rules requiring it to set aside reserves for stock compensation. Excluding that, the results were largely in line with estimates, with a profit from operations of $515 million on $1.18 billion in revenues. But analysts said the social media space is under pressure and that Facebook would need to show more spectacular gains to justify its stock market value. Morgan Stanley’s Scott Devitt maintained an upbeat view, saying “we believe investors may come to appreciate Facebook’s accelerating ad revenue growth and expanding margins, and therefore see around 50% share price upside (growth) over the next 12 months.”
Published in The Express Tribune, July 29th, 2012.