Shares in Facebook fell to a record-low $23.94 in after-hours trading last night, a drop of 11%, after the company reported a loss in its second quarter financial results. This was the firm's first report since being publicly floated on the stock exchange in May.
All told, Facebook reported a $157 million loss for the quarter. Its revenue for the three-month period came to $1.18 billion, up by 32% year-on-year and beating analysts' estimates. Income from advertising accounted for 84% of its total revenue, at $992 million, a year-on-year increase of 28%. Expenses jumped by a massive 295% year-on-year, to $1.93 million because of "share-based compensation expenses" as previously detailed in its IPO prospectus, which did little to settle investors.
The social network's monthly active users as of June 30 reached 955 million, an increase of 29% when compared to a year earlier. Facebook's daily active users increased by 32% year-on-year and averaged 552 million during June. Industry concerns about whether Facebook could capitalize on the growing number of mobile users was highlighted with a 69% year-on-year growth in the number of mobile monthly active users, reported at 543 million for the quarter.
"Mobile is a huge opportunity for Facebook," Mark Zuckerberg said. "Our goal is to connect everyone in the world. And over the next five years, we expect 4 or 5 billion people to have smartphones. That's more than twice as many people as have computers today."
Zuckerberg and Facebook COO Sheryl Sandberg stressed several times during the earnings call that the social network was doing more to squeeze revenue from its rapidly increasing mobile users. Advertising initiatives such as "sponsored stories" in people's newsfeeds was generating $1 million per day by the end of June, with half of that income generated from mobile users.
"The issue is Facebook's revenue growth which has slowed down over the last 12 months and the real worry is it's not going to be able to turn it around," Ian Maude, head of internet for Enders Analysis said when speaking to the Telegraph. "Plus the revenue per user is pretty flat. But its biggest problem is monetizing mobile. As more and more of its users access Facebook on mobiles, the social network must prove it can monetize mobile if it is to dramatically grow revenues."
Zuckerberg also dismissed the latest rumors surrounding a possible HTC-Facebook smartphone. According to the CEO, "building out a whole phone wouldn't make much sense," although he was very keen to point out that his company wants to be deeply involved in mobile phones.