Shares of Social Network, Facebook Inc. (NASDAQ: FB) are flat in trading today after falling sharply in the previous trading session. FB shares slumped on Monday after an article published in the financial magazine Barron’s stated that the “Stock is too pricey”.
Barron’s article points out that the shift in the Facebook’s user base to mobile platforms has brought no luck to the company. Unlike its traditional usage in PCs and laptops, FB hasn’t yet found any way to monetize its mobile traffic, the article noted.
Facebook’s main stream of revenues is from advertisements on its user page. The small screens on mobile phones and tablets don’t provide any opportunity for the company to configure its ads. Moreover Apple Inc. (NASDAQ: AAPL) and Android devices have a very good operating system and faster performance, which has led FB users to spend very less time on social networking.
Though many suggested FB to charge a minimal of $1 to all its users which will easily generate over $5 billion annually, Founder and CEO Mark Zuckerberg had ruled out this option and announced that “FB is free and always will be”.
Andrew Barry, author of the Barron’s article also doubts FB’s strategy of issuing shares as a compensation plan to employees. FB had issued over $1.4 billion of restricted stock in 2011 and around $1 billion so far this year to its employees which makes an additional compensation of $500,000 per employee. This had led the author to valuate FB much less than its current price.
As per its latest second quarter results for the period ended June 30th 2012, FB’s revenues increased by 32% to $1184 million from $895 million in June 2011. But it had operating losses of $743 million compared to operating profit of $407 million in June 2011. Net profit had declined by 199% to ($157) million from $159 million.
Its total assets were worth $14928 million including $2098 million as cash and its equivalents. Total liabilities were $1619 million, among which 64% were current and the remaining was long term. Total stockholders’ equity was $13309 million.
At the last check, the stock was trading 0.05% higher at $20.80, with volume down from daily average of 57.11 million to 27.28 million. The stock has been trading so far for the day in the range of $20.34 and $21.21.
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