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Economy
Facebook Shares Slump Despite Upbeat Earnings Report
Analysts say Facebook has a lot of work to do to regain investor confidence. Shares of the Menlo Park-based firm are taking a beating Thursday in after hours trading.
The drubbing came after the company narrowly beat Wall Street expectations in its first quarterly earnings report since going public.
Senior Analyst, Colin Sebastian, with Robert Baird and Company, says Facebook needs to show it can expand its ad revenue in the rapidly growing mobile market because investors are not convinced it can.
“It’s still early days for Facebook in selling advertisements on phones and tablets, he says. “But the company is making progress. They did say that the early indications from advertising on these devices has been positive.”
Facebook shares dropped after the IPO and have never recovered. Some analysts accuse the company and investment bankers of presenting misleading information about the firm’s prospects for short term growth.
Sebastian says while many investors are impatient, he thinks the social advertising techniques Facebook is testing have the potential to be much more lucrative for the company in the long term.
