Friday, July 27, 2012

Facebook shares sink to new low after 2Q results

NEW YORK (AP) — Facebook's stock hit a new low Friday after it reported lukewarm second-quarter results and didn't give an outlook for the coming months.

The stock fell $2.88, or nearly 11 percent, to $23.97 in afternoon trading Friday, after earlier trading as low as $22.28.

Facebook Inc.'s initial public offering of stock priced at $38, and its low had been $25.52, hit on June 6. The stock is now about 37 percent below its IPO price.

Facebook issued its first financial report as a public company after the market closed Thursday. The company reported slightly stronger-than-expected revenue and a gain in user numbers, but investors weren't impressed.

Although revenue grew 32 percent in the second quarter, growth has slowed from earlier this year and from previous years. That's a concern for a newly public company. Investors are willing to value new companies highly, even if they are not making a profit, because they expect booming revenue.

Baird's Colin Sebastian also pointed out that the company is spending more on technology and hiring, driving up expenses.

But he's not overly concerned. He backed his "Outperform" rating for Facebook, saying advertising revenue was better than expected and the company is improving its ability to make money from users who access Facebook from apps on their phones and tablet computers. Learn more...

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