Here’s Why Even the Facebook BULLS Are Running Scared

Market research firm eMarketer has cut its Facebook (NASDAQ:FB) earnings estimate from the one it made earlier this year, saying the revisions reflected the social network’s “underperformance throughout the first half of 2012, along with questions about the effectiveness of some of the site’s ad products.”

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EMarketer, which had been fairly bullish about Facebook, now expects the company to bring in $5.04 billion this year instead of an earlier estimate of $6.1 billion. It also expects revenue to rise 36 percent this year and 31 percent the next, compared with an 88 percent gain last year. Advertising growth will slow to 34 percent this year and 29 percent in 2013, compared with more than 68 percent last year, the research firm said.

Facebook, which had seen incredibly high interest from investors before it went public in May, has come crashing down in the months after. Its share price has fallen to about half of its level in May, when it debuted at $38. Most of Facebook’s revenue comes from advertising on the site and the company has been under pressure to prove to its new investors that its ad model can continue delivering in the long term. It is also working hard and rapidly on improving its mobile offerings as more and more users of the social network move to that platform over from PCs.

According to eMarketer, Facebook should start its recovery by next year as new mobile advertising products from the company are launched and it gets a firmer hold on international markets. The research firm was also happy with Facebook’s efforts to increase revenue through its payment platform, including from sales associated with games such as Zynga’s (NASDAQ:ZNGA) Farmville.

Shares of Facebook (NASDAQ:FB) finished Friday at $18.06, down 5.4% and near an all-time low.

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