Projected 2012 Earnings for Facebook Down $1 Billion
Bad news continues to come down the pipeline for Mark Zuckerberg and company of Facebook, this time in the form of the market analysis group eMarketer slashing the company's projected earnings for 2012 by a whopping $1 billion.
Facebook, currently the largest social network on the planet, has seen a steady decline in their stock price since their IPO, with the Daily Mail reporting that co-founder David Muskovitz just sold an additional 450,000 shares - tripling-down on his recent trend of selling roughly 150,000 shares per day for the past few weeks running.
It's not like Muskovitz needs the money all too badly either, since reports indicate that his net worth exceeds $2.4 billion. Peter Thiel, one of Facebook's earliest investors, recently sold roughly 20 million shares of his own. However, the report from eMarketer indicates that the recent share sell-off is really just a symptom of confusion regarding the profitability of advertising on Facebook shared among so many major companies.
$6 Billion in Earnings for 2012? Mmm, try $5 Billion
Before today, eMarketer was predicting earnings for Facebook in 2012 to fall around the $6 billion mark. However, company analyst Debra Aho notes that Facebook is having difficulty explaining to major marketers why advertising on Facebook would be effective. This, coupled with the fact that these same major marketers aren't even sure of how to measure the results of Facebook advertising, caused eMarketer to slash its revenue predictions for FB by $1 billion. Aho goes on to say that Facebook needs to address the concerns of these marketers more quickly than it is now.
Is There Any Good News for Facebook?
Yes, according to the same eMarketer report. Paid advertising isn't as big of a revenue stream for Facebook as it once was, though it still sits at almost 84%. The situation is projected to get better, however, with estimates indicating that revenue streams aside from paid advertising will grow by over 45% by the end of the year. This is largely due to Facebook Credits, the currency used for purchases made on the site. There's no doubt that Zuckerberg and friends are scratching their heads to further diversify their revenue portfolio as we speak, however.
In other good news, Facebook is still predicted to earn around $6.6 billion in 2013, continuing a trend in upward growth. This would represent a 31% jump over the projections for 2012.
Predictions and projections won't necessarily be enough to keep current investors happy, or to convert potential investors for that matter, with multiple news outlets wondering whether Zuckerberg should step down from the helm (a Mashable poll indicates equally divided thinking on this topic). Indeed, earlier today, Forbes reported that Facebook's share price just hit a new all-time low of $18.30.
The real storm could come in November, however, when all Facebook employees will finally be able to sell their own shares. Things could get ugly very quickly if the stock price isn't upward-bound by then.