Facebook (Nasdaq: FB) Stocks Dips Ahead of Key Earnings Report

Here are the estimates:

• Facebook is expected to report net income of $706.06 million, or earnings per share (EPS) of $0.20, up from $426 million, or EPS of $0.03, in the same quarter a year ago.

• Excluding one-time events, forecasts are for the company to post EPS of $0.27, compared with $0.17, a nearly 60% increase

• Revenue for the October-December period is anticipated to come in at $2.32 billion, up from $1.59 billion a year ago, thanks to a new ad platform that drew advertisers over the busy holiday season.

• For the full year, analysts are looking for EPS of $0.84 on revenue of $7.63 billion. That compares to EPS of $0.53 on revenue of $5.09 billion in 2012, up 58% and 50% respectively.

Today's earnings report is a big factor in where FB stock - which doubled in 2013 - will go in 2014. While an earnings beat could propel the stock near the $60 a share mark, a miss could trigger a more drastic plunge.

Here's what investors should watch.

One bad sign ahead of earnings: multiple news reports have been telling us for months that teens are fleeing Facebook at a rapid rate for rival sites.

Digital consultancy iStrategy Labs released a study midmonth revealing just how many teens have bolted Facebook - and the numbers were ugly.

The social networking site currently has 4,292,080 fewer high-school-aged users and 6,948,848 fewer college-age student users than it did in 2011. That's more than 11 million users who have left in just two years' time.

A recent study from Piper Jaffray found that fewer teens say Facebook is "important to them." Just 23% of teens in the October 2013 study consider Facebook the most important site, a 42% decline from a year earlier.

Fickle teens are turning away from Facebook because of boredom, oversharing friends, and concerns about parents' prying eyes. In addition, its massive size (1.1 billion worldwide members), privacy risks, and inclination to provoke drama has made the site a social burden.

"This doesn't surprise me [that Facebook is losing teens]," Money Morning Chief Investment Strategist Keith Fitz-Gerald said. "My oldest got tired of Facebook a year ago. He and his friends hardly ever check in there. I've always said this was a risk and it appears that the problem is accelerating. What works in college when it comes to rating bars and friends doesn't work in the real world for long."

And we know from before how declining user data can slam FB stock...

Word of teen defections overshadowed Facebook's impressive 2013 third quarter.

Shares originally jumped 15% to $52 after FB's earnings report showed a 60% increase in Q3 sales versus a loss in the same quarter a year ago. But the stock gave back all its gains and more, slipping to $46.50, after Ebersman's teen exodus comments came on the subsequent conference call.

And while Facebook will likely tout its fresh advertising features in attempts to offset its fading popularity among teens, recent reports claim Facebook is "failing marketers."

"[Facebook] focuses too little on the things marketers want most: driving genuine engagement between companies and their customers," analyst Neil Elliot wrote in an open letter to Facebook Chief Executive Officer Mark Zuckerberg. "Your sales materials tease marketers with the promise that you'll help them create such connections. But in reality, you rarely do. Everyone who clicks the like button on a brand's Facebook page volunteers to receive that brand's message - but on average, you only show each brand's posts to 16% of its fans."

Furthermore, studies show 87% of people pay no attention to ads, and 75% say ads on social network sites don't encourage them to make a purchase.

Shortly before noon, Facebook (FB) stock was down 1.6% at $54.30.

Related Articles:

• Forrester Research:
  Why Facebook Is Failing Marketers
• ABC News:
  Facebook May Be Losing Its Cool With Teens
• Time:
  More Than 11 Million Young People Have Fled Facebook Since 2011