Round 2: Facebook to report 3Q results after markets close
A magnifying glass is posed over a monitor displaying a Facebook page in Munich. (AP / Joerg Koch)
Published Tuesday, October 23, 2012 7:55AM EDT
NEW YORK -- In Facebook's second quarter as a publicly traded company, the world's largest social media site is juggling the challenge of growing its advertising revenue while maintaining the loyalty of more than 1 billion users.
Facebook is expected to report earnings of 11 cents per share on revenue of $1.23 billion after the market closes Tuesday, according to FactSet. The Menlo Park, Calif., company has not provided investors with any financial guidance.
Susquehanna analyst Herman Leung says that the company's progress in boosting mobile advertising will be the focus Tuesday. Facebook has only recently started showing ads, which it calls "sponsored stories," on mobile devices. The challenge with small screens is showing the ads without annoying users.
Wedbush analyst Michael Pachter said several new or modified products will likely boost revenue growth. Besides the mobile ads, these include the Facebook Exchange, which lets advertisers target users in real-time, based on outside websites they visit.
Challenges for Facebook include the declining fortunes of online game maker Zynga Inc., which accounts for as much as 12 percent of Facebook's total revenue. And last week, a disappointing quarter from Google Inc. dragged Facebook's stock lower with it. Google's ad revenue grew at the slowest pace in three years and some have begun to expect the same from Facebook.
Shares of Facebook Inc. closed at $19.32 on Monday, down 49 percent from its initial public offering price of $38.