Facebook Earnings Call
After the market closes today, Facebook will conduct its first ever earnings conference. With the share price hovering in the high twenties down from the IPO price of 38$, investors are looking forward to hearing what the plans going forward are for Facebook and most importantly their strategy for creating revenue.
As Facebook was hammered during the weeks following the IPO with conversation regarding the doubts about its future revenue growth, Mark Zuckerberg and his staff know that this is the primary point of discussion that they will have to address during their earnings call. The street is projecting that FB will see an increase of earnings compared with last years’ second quarter, however, the growth rate of new users has been steadily declining.
I am curious to see what role Zuckerberg will play in the conference. Investors are hoping that he will take the lead to project confidence in the company, but I have a feeling that the conference will most likely be led by one of his lieutenants.
There has been talk around having Facebook opening membership up to kids (currently FB requires that its members are of 13 years of age). Having kids be able to sign up for FB would allow potential revenue streams that come from playing games that require spending money on virtual items, a strategy that has been successful for companies like Zynga.
This strategy sounds like it could have potential to boost revenues, however, it seems like any potential cash flows are expected to be minimum and does not represent a significant move in strategy for long term earnings. To me it sounds like FB is using this as a desperation strategy to show potential earning possibilities but does not address a stable platform for revenue growth.
What are you expecting to hear from the FB earnings call? Will FB address the revenue issue that investors are expecting? If there is no realistic substantial projections will the stock price drop? Or has the monetization issue already been priced in? (FB closed at 29.34 on 7/25).