With Facebook's stock off by more than half since its May IPO, CEO Mark Zuckerberg is under pressure to show that he's getting the business back on track for accelerating growth. The company faces a couple of major questions. First, how well are Facebook's ads working, and how soon can the company return to accelerating growth? Second, how is the social network transitioning to mobile? And third, how well is Facebook growing revenue outside advertising-- including payments and new revenue from app downloads and gifts.
Facebook has made a number of changes in the past year—but they're unlikely to impact the bottom line for this quarter's numbers. Instead, it'll be interesting to see what guidance and color Facebook gives on how well these new initiatives are working. Facebook recently announced Facebook gifts, which builds on the millions of people who wish each other 'happy birthday' on the site every day. The company's also testing "collections" a way to make purchases from retailers through photo albums of their products.
The company also has a number of new ad initiatives in the works. IT's experimenting with an ad Network—putting social ads on other websites and social apps. We could also hear about how well the "Facebook Exchange" is working—it launched out of beta in September. The service allows advertisers to buy Facebook's inventory with real-time bidding, allowing retargeting. Facebook controls about 25 percent of display ad inventory, according to ComScore, so a better way to sell and use that space, could have a real impact on results.
And then of course there's Facebook's mobile issue. On Monday eMarketer released a new report saying that time spent using mobile devices for the likes of Internet and app use, gaming, and music, has more than doubled in the past few years. This year the amount of time consumers spent using mobile devices—excluding talking on the phone—will grow 52 percent to an average 82 minutes a day. And that mobile growth is coming at the expense of time spent online.
Facebook makes less money from its mobile users than its desktop users, and has been taking steps to change that. At the end of the second quarter the company provided some interesting numbers on how it's making money on mobile and Wall Street is eager for an update. Zuckerberg said that mobile users are 20 percent more likely to access Facebook each day, and that the 'Sponsored Stories' ad format has a $1 million-per-day run rate, half of that coming from mobile, after just launching mobile ads in March.
We expect Mark Zuckerberg, along with COO Sheryl Sandberg and CFO David Ebersman to all be on the earnings ball. We'll be listening for any guidance on growth potential. With a big lockup expiration period coming in November, the pressure is on for Zuckerberg and team to deliver.
-By CNBC's Julia Boorstin
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