Facebook marked its first anniversary as a public company on Friday, and investors have little reason for merriment.
This week, its shares were down about 29 per cent from the initial public offering price of $US38, making Facebook the fifth-worst performer of the 124 stocks that debuted during the same period, according to Bloomberg data. Among companies that raised $US200 million or more in an IPO, the California-based social network ranks last.
It could be worse: the stock has climbed more than 50 per cent from its September low and has a market value of almost $US65 billion - behind eBay at about $US72 billion and ahead of Time Warner at $US57 billion and DirecTV at $US36 billion.
Yet a year after Facebook raised $US16 billion in the largest technology IPO on record, investors remain concerned about its ability to generate earnings as more users shift from personal computers to smartphones and tablets.
"The battle for this company is: mobile's growing fast, desktop is slowing," said Benjamin Schachter, an analyst at Macquarie Securities USA who rates the stock outperform.
"Is mobile's growth enough to make up for the declines in desktop? That's clearly the key issue for the near term." Chief executive Mark Zuckerberg told analysts in January that "there's no argument. Facebook is a mobile company".
Facebook has introduced several mobile advertising products, including sponsored stories, that allow companies to promote content a user's friends have signalled they "like" or interacted with. With promoted posts, companies can highlight marketing messages to their "fans" and friends of fans.
Those efforts are making a difference. Mobile ads accounted for 30 per cent of Facebook's $US1.25 billion in advertising revenue in the first quarter of 2013. Next year, Facebook will have 13.3 per cent of the US mobile advertising market, up from zero in 2011, according to researcher eMarketer.
Still, eMarketer predicts that share will decline to 11.5 per cent in 2015 amid rising competition, while Google , the world's most popular search provider, will continue to increase its market share every year, growing to 58 per cent in 2015 from 51 per cent in 2011.
As it struggles to make money from mobile, Facebook has to accommodate advertisers without alienating users.
Facebook is predicted to report revenue of $US6.7 billion this year, an increase of 32 per cent from 2012.