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Facebook Earnings Underwhelm Investors

Facebook’s first post-IPO earnings report was not a hit with Wall Street investors. Shares in the world’s largest social network dropped almost 10% after the report showing  disappointing earnings of $.12/share on revenue of around $1.18 billion.

Facebook Stock Disappoints

The fact that Facebook’s revenue is up 12% over Q1 and still getting punished shows a collective disappointment with the much hyped stock offering.

Investors were expecting big things from Facebook and, so far, have only seen stock prices drop by almost 38% since their first listing. (Facebook entered the NASDAQ at $38.23 and closed on Friday, July 27 at $23.70.)

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Why The Drop?

Facebook’s Wall Street fizzle is the result of sky high expectations for Internet stocks, as well as a perceived plateau in the company’s growth. Investors are simply expecting bigger revenues and growth than Facebook can deliver, despite significant growth in the mobile sector and a nearly 30% jump in monthly active users.

Social media stocks as whole were also impacted by an awful earnings report from Facebook’s best known partner Zynga. The social gaming company reported a Q2 loss of $22.8 million and a 40% drop in share prices.

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What It Means for Affiliates

Affiliate partners should be keeping a close eye on Facebook’s fortunes because the implications for iGaming are pretty significant.

If investors pressure Facebook to increase earnings in a hurry, Mark Zuckerberg and company are more likely to consider real cash social gaming. Gaming companies are already preparing for this outcome by teaming up with social gaming companies.

No one knows what Facebook’s future holds, but it won’t take too many more earnings reports like this to make new revenue streams like gambling seem very attractive.