Facebook shares slide amid slowing growth

(MoneyWatch) Facebook's (FB) stock price plunged in after-hours trading Thursday following the social networker's release of its first earnings report.

At one stage, shares were down 10 percent to $24.12. Although the company's $1.18 billion in sales for the quarter beat analyst expectations and were up nearly one-third from the year-ago period, Facebook's growth appeared to disappoint Wall Street, which expects the company to justify its $57.4 billion market capitalization.

Facebook is a leading social networking and Internet company. Investors expect such companies to show rapid growth for an extended period of time. For example, last quarter Google (GOOG) grew revenue by 21 percent year-over-year. Apple (AAPL), which had a relatively bad quarter for the company, saw its sales grow only 23 percent compared with the year-ago period.

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By comparison, Facebook sales are up 32 percent year-over-year. But the company is far less mature than either Apple or Google, which means it should be growing faster than other tech giants. More importantly for investors, Facebook's rate of growth seems to be slowing.

The data for the graph below comes from Facebook's public filings with the SEC. The blue line shows actual announced revenue, while the black one uses a two-month moving average to smooth out the quarterly bumps and highlight the company's underlying growth trend.

Erik Sherman

Note that while Facebook's revenue is growing, the rate of growth is leveling off. That could be related to Facebook's overall drop in U.S. unique visitors over the last six months. Even though the company saw monthly average users increase 29 percent year-over-year to 955 million, North American users have provided half of the company's revenue. Expansion elsewhere in the world is not as profitable for the social network.

In fact, the average amount of quarterly revenue Facebook generates per user is another cause for concern. That figure in the last quarter was $1.24, which on annual basis comes to $4.96 per user. That's down from 2011, when the company generated an average of $5.11 in revenue per user. Although Facebook's growing user base helps mask that decline, if it continues it will eventually become more obvious -- and painful to investors.

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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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