Friday, July 27 12:51:25
Facebook Inc shares fell in premarket trading today after the company's lack of a financial forecast reinforced concerns about its mobile strategy.
The social network on Thursday reported a drastic slowdown in revenue growth and said its advertising views lagged user growth even as new social ads, which appear directly in users' "newsfeeds", drove up ad rates.
Users increasingly access Facebook through mobiles, which have less space for advertising, undercutting revenue. Facebook only recently began to offer limited advertising on its mobile platform. Advertising views lagged user growth in the last quarter, largely due to the increasing use of Facebook on mobile devices, Barclays Capital analysts said in a note to clients. They cut their price target on the stock by 11 percent to $31.
Shares of Facebook, which have shed a third of their value since their botched debut in May at $38, fell below $24 in post-market trading after the company's results.
"A lack of specific guidance and cautious management commentary on increasing the pace of investment creates some uncertainty regarding near-term margins," Robert W. Baird analysts said. Facebook saw its mobile monthly active users surge 67 percent year-on-year to 543 million users and some analysts noted it was trying to capture revenue from this change.
"Facebook is in the early stages of an important transition in its advertising business that should drive accelerating growth and margin expansion over time," J.P. Morgan Securities analysts wrote in a note to clients.
According to Thomson Reuters' StarMine, six analysts rate the stock a "strong buy," 11 rate it "buy,", 17 rate it a "hold", while one each rate it a "sell" and "strong sell". (C ) Reuters