Facebook’s day of reckoning: 2Q earnings report

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“The specific challenge for Facebook is that it is only just now starting to try to monetize this mobile usage,” Citi Investment Research analyst Mark Mahaney said in a note to investors. Facebook’s current plan, he said, is to insert so-called “sponsored stories” _ ads into people’s mobile feeds. The ads are based on friends’ activities.

“But it is very unclear how this will play out, how users will react to changes to what has been an ad-free mobile experience to date, and whether these ads will be effective on mobile devices,” the analyst wrote.

It’s unclear if Facebook will offer its outlook for the current quarter and beyond. Not all companies do. Apple does, while Google Inc. doesn’t and never has. If Facebook does provide a forecast, Pachter thinks it will be conservative. The company has no reason to anger investors who have already pushed its stock down 24 percent from its $38 IPO price.

Facebook will report its earnings on Thursday after the stock market closes. It will hold a conference call to discuss the earnings at 5 p.m. ET.

On Wednesday, the Menlo Park, Calif.-based company’s stock closed up 89 cents at $29.34. It fell nearly 8 percent to $27.04 in extended trading after Zynga’s report came out.

The stock has traded from $25.52 to $45 since going public. It has not risen above $38 since its first trading day.

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