Facebook Releases Q2 Earnings - Wisnefski Visits with Bloomberg
John Borkowski, July 26, 2012
Facebook announced their Q2 earnings this evening at 5:00pm, New York time, via conference call with shareholders. The social media firm was expected to announce earnings of $0.12 per share on revenues of $1.16 billion. Facebook announced earnings of $0.12 per share on revenues of $1.18 billion which was in-line with analysts’ expectations, however their stock price is down more than 11 percent in after-hours trading.
Kenneth Wisnefski, founder and CEO of WebiMax, visited with Bloomberg today and spoke with Mark Crumpton, on his show The Bottom Line. Wisnefski, a social media expert and serial web entrepreneur, told Crumpton “Facebook’s growth is slowing down and investors are meeting it with a lot of distrust at this point.”
Facebook spent approximately $1.93 billion during the quarter, as the company continues to invest heavily in recruiting key talent, research and development, and reinvesting in current technology. As of today, the company employs slightly less than 4,000 employees.
“There is a lot of concern with advertisers right now that they are not seeing the type of return that they would like to see from Facebook,” states Wisnefski. “Advertisers have thus started to shy away from it.”
Facebook indicated that advertising revenue accounts for 85 percent of overall revenues.
While Q2 was in line with analysts’ expectations, investors were looking for more from Facebook, including a significant increase in revenues and earnings per share. The in-line results have sent the stock to an all new low since going public in March.
Wisnefski argues that Q3 should be a profitable and successful quarter as there are multiple products the company is rolling out that has not had enough time to mature at this point.
“Facebook launched mobile ads this quarter and are still in the introduction phase of the product life-cycle,” states Wisnefski. “Sponsored Stories (as they are labeled), are posts and other actions by brands and consumers that are promoted by a brand. Sponsored Stories have been effective to this point, as they have a click-through rate of 1.14 percent, almost double the rate of .59 percent for ads in the news feed of desktop users. In addition, the click-through rate for Sponsored Stories was 53 percent higher than standard ads.”
Facebook faces significant challenges ahead, none more than convincing marketers and advertisers that advertising on the social media platform has its benefits and generates a return for advertisers.
Wisnefski concluded his conversation with Crumpton with the following thought “I think Q3 stands to be better than Q2, as now the company is in position to start showing some value.”