Investors finally realizing Facebook has no clothes

Slowing growth, elusive mobile revenue, lack of forecast add up to doubtful future

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Facebook shares plunged to a new low of 22.28 on Friday after the social networking giant reported Q2 earnings following Thursday's market close that showed a continued slowdown in revenue growth.

That Facebook's revenue growth has been decelerating is no secret -- it was well-known even before the company's May IPO, when shares were priced at $38.

But shares plummeted anyway, even though Facebook met street forecasts with sales of $1.18 billion and adjusted earnings of 12 cents a share in its first quarterly earnings report since going public.

While it's true that companies often are punished by Wall Street for merely meeting expectations, they rarely suffer this kind of beatdown. So what's freaking out investors?

How about the fact that Facebook declined to issue any guidance for the current quarter or the rest of the year. Fact: Companies never decline to issue guidance for good reasons, and investors -- as over-reactive and, well, dumb, as they sometimes can be -- know this. Indeed, Facebook's refusal to give Wall Street a sense of what to expect in the coming quarters puts it in the same camp as Research in Motion and Nokia, which should tell you something.

Throw in the gnawing and entirely realistic concern that Facebook is having difficulty monetizing its growing number of mobile users, and it's easy to see why shareholders are headed for the exits.

I also wonder whether investors are now treating Facebook's happy talk as the BS that it actually is. Consider this comment from CEO Mark Zuckerberg during the earnings call, as described by MarketWatch:

“Mobile not only gives us the potential to connect more people with our services, but it also gives us the ability to provide more value and a more deeply engaging experience,” Zuckerberg said, adding that the company “is beginning to demonstrate that we can advertise effectively within the mobile experience” with its sponsored stories initiative.

Two things: "Beginning to demonstrate" is another way of saying "we're barely making any money off mobile," which is a big problem since smartphones have been around for quite a few years now. And "a more deeply engaging experience"? On Facebook? Is he kidding? The triviality of discourse and engagement on Facebook is exceeded only by that on Twitter.

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