• Shares tumble despite revenue of $1.18billion, in line with expectations
  • Firm lost $157million because of cost of May's botched IPO
  • Total number of users now stands at 955million - one seventh of the world

By Beth Stebner and Hugo Gye

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Anxious: Facebook CEO Mark Zuckerberg is under tremendous pressure to make sure his company does well following its IPO

Anxious: Facebook CEO Mark Zuckerberg is under tremendous pressure to make sure his company does well following its IPO

Facebook executives are breathing a sigh of relief as the company released its first results since going public in a much-hyped but ultimately botched IPO two months ago.

However, shares in the social network still fell after the announcement as it was revealed that the firm made a loss of more than $150million due to a number of one-off payments related to the initial public offering.

The shares, which opened at $42.05 when trading began on May 18, tumbled to an all-time low of $24.03 in after-hours trading following the release of the earnings report on Thursday afternoon.

The slide hit CEO Mark Zuckerberg personally, as his net worth fell by more than $2billion thanks to the reduction in the value of his own stake in the firm he founded in his Harvard dorm room.

Facebook also revealed that its number of users was coming ever closer to the 1billion mark, hitting 955million at the latest count - nearly one seventh of the world's population.

This growth in the number of people with accounts on the network shows little sign of slowing, with the total having risen by 29 per cent since last year.

The number of people employed by Facebook is growing even faster, it emerged on Thursday - the firm now has nearly 4,000 workers, up 50 per cent over the year.

The firm's revenue grew 32 per cent to $1.18billion, from $895million a year ago, a slightly stronger performance than most analysts had expected.

Investors seem to have been holding out hope that Facebook would far exceed expectations - even though the company effectively warned investors before its IPO that Wall Street's expectations were too high.

Excitement: But Facebook's shares have continued to tumble since its landmark IPO in May

Excitement: But Facebook's shares have continued to tumble since its landmark IPO in May

In a filing issued a week before its IPO, for instance, Facebook said its mobile users are growing at a faster pace than the number of ads on its mobile platform.

Analysts took that as a sign that their estimates were out of whack and many of them reduced their estimates for Facebook's projected revenue and earnings.

That said, Facebook didn't start showing ads on its mobile app until this spring. While it is true that it was late to the game - after all, its mobile user base is growing fast - it does not mean it will not be able to grow mobile advertising revenue in the future.

Overall, Facebook said its revenue from advertising totalled $992million, a 28 per cent increase from the same quarter last year. That accounted for 84 per cent of total revenue.

The company did not provide an outlook in its earnings press release - another possible reason for investors' disappointment.

Waiting game: Traders work on the floor of the New York Stock Exchange during afternoon trading on the 24th; investors and analysts are highly anticipating Facebook's earnings report

Waiting game: Traders work on the floor of the New York Stock Exchange during afternoon trading on the 24th; investors and analysts are highly anticipating Facebook's earnings report

Tense times: Investors, seen on the floor of the NYSE on July 24, looked apprehensive, left, and right, Facebook's share price fell to a low of $25.87 on June 5th and has shakily landed at $29.34

FACEBOOK BY NUMBERS

Users: 955million (up 29%)

Revenue: $1.18billion (up 31%)

Profit: -$157million

Employees: Nearly 4,000 (up 50%)

Facebook shares tumbled ahead of its first quarterly results announcement, hurt by a weak quarterly report and a foreboding outlook from online game developer Zynga, which hosts popular games like Farmville.

Shares in Facebook dropped seven per cent to $27.65 in pre-market trading while Zynga slumped a staggering 40 per cent to $3.04 – and the pair were the two most heavily traded stocks before the bell on Nasdaq.

Investors were bracing themselves for what could be some very bad news.

'Considering that Zynga was a recent IPO, it's another black eye for Wall Street. You bring up an IPO and you get burnt again and again,' Joe Saluzzi, co-founder of Themis Trading LLC in Chatham, New Jersey, told Reuters.

Zynga's results are 'not creating good confidence in the sector as they (social media companies are) certainly related to each other.'

The fate of the two companies is intertwined, with Zynga's games, such as 'FarmVille' and 'CityVille,' helping to make up more than a tenth of Facebook's revenue last year.

Excitement: Onlookers in Times Square took pictures of Zuckerberg, seen on a screen moments after Facebook's IPO in May

Excitement: Onlookers in Times Square took pictures of Zuckerberg, seen on a screen moments after Facebook's IPO in May

Late on Wednesday, Zynga slashed its 2012 outlook and the company's quarterly results badly missed Wall Street targets.

A number of brokerages cut their price targets on the company on Thursday, including Wedbush, Citigroup and Lazard, casting some uncertainty over Facebook ahead of its inaugural results after the close of trading Thursday.

Earlier this week, the options market was forecasting a 14 per cent move up or down in Facebook shares following the results. That means options investors expect the stock to rise to as much as $32 by Friday or to fall to as low as $24.

Since the IPOs, shares of Facebook and Zynga have been in a downward spiral. Facebook is off more than $10 from its market debut price of $38 in May, and Zynga is at $4.92, nearly half its debut price of $9.50 in December.

Despite the steep decline in their share prices, Facebook and Zynga are both trading well above their market valuations. Facebook is still trading at around 70 times earnings, according to Thomson Reuters data.

An analysis by Thomson Reuters StarMine puts the company's intrinsic value at a modest $9.72 a share, or about one third its current value, based on estimates of the company's projected growth for the next decade.

Earlier in the week, analysts, on average, were expecting revenue in the second quarter to grow 28 percent to $1.15billion.

With over 900million users, Facebook is the world's largest social networking company, challenging established Web companies for consumers' online time and for advertising revenue.

Here's what other readers have said. Why not add your thoughts, or debate this issue live on our message boards.

The comments below have been moderated in advance.

All this is still just HYPE!! Their hiring was up 50%? What exactly are those new employees making/doing? Facebook offers nothing tangible other than making you virtually water crops and feed cows. If they're a service company then they only serve them$elve$.

Why would a person invest in a company that produces nothing and expect to make money from it?

Somehow I' am not surprised.

I don't believe close to a billion users - most of the people I know have 2 and 3 phony names on there, so that cuts it down drastically. Its getting way too boring anyway!!

Yeah right!! That 'berg is a billionaire. He's set for life.

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