Since hitting a low under $18 in early September, Facebook (NASDAQ:FB) has staged a nice comeback. In January, it broke the $32 mark — more than a 75% gain.
Unfortunately, since then, shares have mostly been stuck in a range from $25 to $29.
That’s likely to change today, though — whether for better or worse. After all, Facebook reports its first-quarter results after the bell this afternoon.
The consensus estimate is for a 36% increase in sales to $1.44 billion and a 30% increase in profits to $308 million, or 13 cents per share. This shouldn’t be surprising; Facebook has already indicated that expenses will be heavy in 2013 because of the substantial investments for the transition to mobile.
In fact, such investments are part of the reason several Wall Street analysts are upbeat. For example, Raymond James’ Aaron Kessler recently put a $37 price target on the stock for the next 12 months. He thinks the company will see a nice growth boost from the efforts in mobile and the new ad exchange called FBX.
Despite all this, though, investors should still be cautious. The tough reality is that there are still some landmines which could make for a so-so quarter. Let’s take a look at a few:
Facebook has certainly been active, launching Graph Search, a revamped News Feed (which has much larger photos and videos) and, once again, FBX. Still, there has not been much information on these features. True, Mark Zuckerberg may want to use the conference call as the time to pump things up … but if the new products were getting traction, wouldn’t there have been some buzz from the company already?
It’s getting tougher to find users in developed markets, too. As a result, Facebook has been pushing hard into India and various parts of Asia. Unfortunately, though, there are ominous signs that the existing user base is starting to deteriorate. This has been evident from various surveys from comScore, Jefferies and Nielsen, to name a few.
The difficult truth is that Facebook fatigue seems to be creeping up as hot companies, like Pinterest, Path, Twitter and Tumblr generate lots of heat. At the same time, a variety of chat operators — which include WhatsApp, Tango and SnapChat — have become extremely popular with teens.
In terms of the mobile move that many are optimistic about, it’s true that Zuckerberg has certainly made progress. If anything, he was smart to completely redesign the core apps in “native” format, which makes the experience quicker and more immersive. This probably helps explain why Facebook has become the world’s largest mobile platform, with over 680 million monthly active users.
Unfortunately, the results of Facebook’s new mobile apps have been mixed. Just look at Poke, which was essentially a knock-off of SnapChat. The app’s ranking on Apple’s (NASDAQ:AAPL) app store has plunged to 282.
It also looks like Home — the app that makes Facebook the startup page on a phone — is having troubles. While it has some cool features, including easy access to chat conversations, there are some problems. For example, the app can be a drag on battery life, has no widget support and well … quite frankly, the experience seems to be annoying. Do you really want to see your friends’ lousy pictures on the front page of your phone?
“It was cool at first but needs some tweaking to be more user friendly. It takes a lot of different moves and clicks just to get to your main home screen. I installed it last night and unistalled it this morning.”
All in all, Facebook still has a long way to go. Things have gotten better since its botched IPO, but I wouldn’t expect a stellar quarter or subsequent jump from the stock as a result of this afternoon’s report.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities, and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.