July 18 (Bloomberg) -- Facebook Inc. shares are under pressure in the run-up to an earnings report, due next week, that will probably indicate growth slowed in the second quarter.
The shares pared losses today, rising 1.5 percent to $28.52 at 9:46 a.m. in New York. Through yesterday, the stock had dropped 26 percent since its May 17 initial public offering.
The largest social-networking service is struggling to add new users in some of the markets, including the U.S., that make up most of its sales, according to report by Capstone Investments. A predicted slowdown in sales led analysts to slice second-quarter revenue projections 4 percent to $1.16 billion in the past month, data compiled by Bloomberg show. The prediction for profit, excluding some items, fell 10 percent to 11 cents a share.
“People are concerned about the growth profile,” said Benjamin Schachter, an analyst at Macquarie Securities USA Inc. “More risk is being reflected in the lower stock price.”
U.S. users on Facebook’s site slipped 1.1 percent, Rory Maher, an analyst at Capstone, wrote in a note yesterday, citing analysis of Facebook users in more than 200 countries.
“Perhaps penetration in the U.S. is reaching maturity, which has implications for revenue growth and user growth,” Maher said in an interview. “It’s reason to be concerned.”
Shares will probably be weighed down further as Facebook nears the end of its “lockup” -- a post-IPO period during which Securities and Exchange Commission regulations bar insiders from unloading shares. Some employees will be able to freely sell stock next month, data compiled by Bloomberg show.
Another concern for investors is the company’s ability to make money from advertisers vying to reach social-network users on mobile devices. Facebook Chief Executive Officer Mark Zuckerberg is focused on adapting his service to mobile devices, where growth in usage is outpacing sales from mobile ads. Bringing Facebook’s features to handheld gadgets is difficult because the user experience is so different than on desktop computers, he said in an interview at the Allen & Co. conference in Sun Valley, Idaho.
Ads shown on mobile phones are smaller and may be less appealing to advertisers and less lucrative than marketing messages on bigger computers. This concern prompted Facebook, just days before the IPO, to advise analysts to lower their estimates for second-quarter sales.