by Michael Tarsala
The success of Facebook’s first-ever earnings report, delivered after the close today, may depend on more than just growth metrics.
Yes, Facebook is a growth investment. So everyone wants to see that growth is not slowing down — at least not much. Analysts will be gauging payments revenue, average revenue per user, subscriber additions — all of that.
Investors won’t care about much else if Facebook is beating those metrics.
To get any sort of benefit of the doubt, though, depends largely on the vision and tone set by Zuckerberg.
So yes, as columnist Therese Poletti says, Zuckerberg needs to be on this call. There is some doubt as to whether that will happen. But it will be a major disappointment if he is a no-show.
The reason is simple. Facebook is by no means a lock as a growth stock. Expected revenue is only 25%, a deceleration, and roughly what Google is putting up. It’s good, but not clearly superior. It really needs to do better than that. To overcome doubts, Zuckerberg is going to have to sell a long-term vision, and be more specific about how it plans to get more than around $1.20 in average revenue from its customer base.
And given the more than 20% stock decline since the $38 IPO, he may have to do that with some flair.
It would only help matters if Zuckerberg can show the Street that he’s not a jerk. The movie “The Social Network” didn’t do Zuck’s reputation any favors.
Beyond that, he showed up to the company’s IPO roadshow in a hoodie, prompting analyst questions about whether he really cared about them. He also refuses to give them much of a say; he owns the deciding 57% of the voting shares.
The perceptions won’t matter much if Facebook blows away estimates. But they will come to the forefront if the company has to sell its story on numbers that are good… but not great.
