Jul 26, 2012 No Comments ›› Pat Dollard
SAN FRANCISCO (Reuters) – Facebook Inc reported a drastic slowdown in revenue growth and failed to offer financial forecasts to quell fears about its ability to boost advertising growth, sending its shares plummeting to a record low.
The company, created by Mark Zuckerberg in a Harvard dorm room, raced through eight years of break-neck growth that was to have culminated with its May coming-out party.
Instead, its share price has headed south as investors questioned its valuation of more than 50 times earnings, and its longer-term ability to sustain growth with users migrating to mobile devices.
“It doesn’t look good with this new information out there. I don’t want to say the story is broken, but the story is kind of broken,“ said Michael Matousek, a senior trader at U.S. Global Investors Inc.
Facebook’s growth rate in the second quarter was the slowest since the first three months of 2011, when it began disclosing that information.
In past years, it has steadily challenged established Web powers Google Inc and Yahoo for consumers’ online time and advertising revenue. Now, as mobile devices like smartphones and tablets penetrate deeper into consumer markets, the company is struggling to drive advertising revenue off them.