Why Facebook Fell to New Lows

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of social networker Facebook (Nasdaq: FB  ) have fallen by as much as 17% today to hit new lows after the company reported second-quarter earnings.

So what: Total revenue rose to $1.18 billion, which resulted in a GAAP net loss of $157 million, or $0.08 per share. Most of this was due to stock-based compensation expenses related to the IPO, and on an adjusted basis, Facebook posted a non-GAAP profit of $0.12.

Now what: The company has now reached a total of 955 million monthly active users, with growth international user additions. Ad revenue was $992 million, and payments revenue was $192 million. Worldwide average revenue per user increased to $1.28, slightly better than a year ago. Investors were a bit nervous about the lack of financial guidance for the coming quarter or the full year and continue to question whether Facebook is worth its lofty valuation.

Interested in more info on Facebook? Add it to your watchlist by clicking here.

Fool contributor Evan Niu holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Facebook. Motley Fool newsletter services have recommended buying shares of Facebook. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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