Facebook (FB) reports after the bell today. Consensus estimates for Facebook are EPS of 13-cents on $1.44 billion in revenue. Unofficially, analysts don't care about the numbers as much as they do the story. On that front, Lee Munson, chief investment officer at Portfolio LLC, suggests investors brace themselves for a letdown.
"I think we're going to be again disappointed by the mobile app growth," he says in the attached video. "Without that what else is there?"
Not much as far as Wall Street is concerned. As was the case when they went public a year ago, Facebook still struggles to monetize users, particularly those migrating to mobile platforms. Any signs that FB is lagging the pace of migration from desktop to handheld will be poorly received.
FB also needs to assuage claims that the number of users in developed markets is already shrinking. Claiming over 1 billion users is a fantastic accomplishment, but it's also about 1/3 of the entire online world. Right now most of the street is looking for growth while the reality of large numbers suggests retention of such a massive user base would be an upside surprise.
User growth going negative isn't on most analyst radars even if the press is starting to ponder the idea.
Taken as a whole, Facebook has a lot more moving parts than most companies that have been public for less than a year. In a sense, FB did its IPO right before a major shift in its underlying business model from desktop to mobile. By FB's own admission, the transition has been inelegant to date. This afternoon's news is unlikely to convince anyone otherwise.
Munson thinks the best way to play the stock is from afar. "I think you gotta stay away from this," he suggests. As it turns out, selling the stock is much easier than figuring out how to close your Facebook account.