Facebook to report first earnings since IPO

Joanna Shields, Facebook Vice President and Managing Director for Europe, Middle East and Africa; Jonathan Labin, head of Global Marketing Solutions for the Middle East and North Africa and Christian Hernandez, Dierctor of Platform Partnerships, attend a press conference in Dubai, on May 30, 2012.

Stacey Vanek Smith: Shares of Zynga are expected to take a dive when the U.S. markets open this morning the social gaming company posted a $22 million loss in the second quarter. Zynga's best known as the marker of the Farmville on Facebook Farmville's a game where where users grow crops, raise animals and trade with other players. Zynga accounts for more than 10 percent of Facebook's revenue.

So bad news for Zynga is being seen as bad news for Facebook, which posts its earnings later today. It's the social network's first earnings report as a publicly traded company. Facebook has had a rocky road since it started selling shares and there are still big questions about Facebook's future. For instance: how, exactly, it plans to make money.

Marketplace's Queena Kim reports.


Queena Kim: With about 900 million users, Facebook is a global communications phenomenon.  But all investors want to know is: what's next?

Debra Aho Williamson is an analyst with emarketer.

Debra Aho Williamson: Facebook needs to show that it has a path to successfully monetizing its users.

Facebook's ad revenue is growing steadily, but not fast enough to justify its stock price.

Williamson: Everybody is going to be looking for is some traction in mobile revenue.

If Facebook's ad sales aren't gaining momentum, the social network could face another problem: share overhang -- meaning, jittery employees could dump shares and the stock plummets. Since the IPO, employees haven't been allowed to sell shares. But starting in August, they will be.

Brian Wieser: If the revenue turns out to be way above expectations, it is possible to alleviate some of the share overhang.

Brian Wieser is an analyst at Pivotal Research Group. But he says if earnings disappoint, employees could stage an ugly sell off.

In San Francisco, I'm Queena Kim for Marketplace.

About the author

Queena Kim covers technology for Marketplace. She lives in the Bay Area.

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