1. The stock investors hold, now at $20.72, is all there is. There will be no dividend. Since it's trading at about 30x next year's estimated earnings, it's hard to argue that it's undervalued. Both Apple and Google trade at approximately 12x expected earnings. From the 10-Q:
2. The lock up releases will flood the market with more stock. According to the filing, from August 15 to May 17, 2013, 2.020 billion shares will be released. For context, about 420 million shares are now trading. From the 10-Q:
"Substantial blocks of our total outstanding shares may be sold into the market when 'lock-up' or 'market standoff' periods end. If there are substantial sales of shares of our common stock, the price of our Class A common stock could decline."
3. The tax man cometh for the restricted stock units. According to the filing, about $1.2 billion has already been set aside to cover expenses for the RSUs granted prior to January 1, 2011. However, regarding the RSUs granted on or after that date, the 10-Q says this:
"As of June 30, 2012, there was $2,245 million of unrecognized share-based compensation expense, of which $2,164 million relates to RSUs, and $81 million relates to restricted shares and stock options. This unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately two years.”
4. Facebook faces unknown legal expenses and potential settlement claims tied to the "botched" IPO. According to the 10-Q:
"Beginning on May 22, 2012, multiple putative class actions, derivative actions, and individual actions were filed in state and federal courts in the United States and in other jurisdictions against us, our directors, and/or certain of our officers alleging violation of securities laws or breach of fiduciary duties in connection with our IPO and seeking unspecified damages. We believe these lawsuits are without merit, and we are vigorously defending these lawsuits.
"Such legal proceedings are inherently unpredictable and subject to significant uncertainties, some of which are beyond our control. Should any of these estimates and assumptions change or prove to be incorrect, it could have a material impact on our results of operations, financial position, and cash flows."
5. Separately, lawsuits relating to patents are not slowing down any time soon. According to the 10-Q:
"We are currently, and expect to be in the future, party to patent lawsuits and other intellectual property rights claims that are expensive and time consuming, and, if resolved adversely, could have a significant impact on our business, financial condition, or results of operations."
6. Facebook predicts user rates will decline. In Facebook's own words:
"We anticipate that our active user growth rate will decline over time as the size of our active user base increases, and as we achieve higher market penetration rates."
7. The decrease in user engagement will have a direct impact on the bottom line. According to the filing:
"Our advertising revenue could be adversely affected by a number of other factors, including: decreases in user engagement, including time spent on Facebook."
"[W]e anticipate that the rate of growth in mobile usage will exceed the growth in usage through personal computers for the foreseeable future and that the usage through personal computers may continue to decline in certain markets...
"Growth in use of Facebook through our mobile products, where our ability to monetize is unproven, as a substitute for use on personal computers may negatively affect our revenue and financial results."
"Our CEO has control over key decision making as a result of his control of a majority of our voting stock.