Facebook’s Moment of Truth

This Thursday, Facebook will announce its first quarterly earnings report since going public back in May. It is critical because its stock price hovers 20% below its IPO price and investors are not yet convinced that big brands are investing in the platform as much as they used to.

Moreover, Facebook hasn’t yet to solve for its most rapidly growing channel, mobile. Its native iOS and Android apps perform poorly and don’t yet feature an ad product that consumers are willing to clickthrough. Contrast that with Twitter, whose mobile products now generate more revenue than desktop ads.

If Facebook does not pull out a stellar quarter, I predict investors will lose confidence and start shedding the stock en masse. Investors are consumers too and will check out of the stock and move on to the next big thing.


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