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Facebook (FB): One Year Later

Tomorrow will mark a year since Facebook (NASDAQ: FB) went public in one of the most hyped initial public offerings in market history. As we know now, the stock has not lived up to that hype.

Facebook shares immediately tumbled after their May 18, 2012 IPO. The social network went public at $38 a share. Within three months, the stock was trading at roughly half that.

It has since recovered, but has never been close to returning to its lofty, hype-fueled IPO price. Earnings growth – or lack thereof – has been part of the problem.

Despite steady revenue growth, Facebook’s net income has been on the decline for the past year. Solving that issue will be a key to the company’s future – and where its stock goes from here. An expanding mobile presence should help the social network’s future earnings potential.

Here’s a comparison of where Facebook stands now vs. where it stood then – both as a company and as a stock:

Facebook (FB) Now                                                                                                 

Share Price: $26.37

Market Cap: $64 billion

P/E: 573

Past 12 Months’ Earnings:  $112 million

Facebook (FB) Then

Share Price: $38

Market Cap: $104 billion

P/E: 104

Past 12 Months’ Earnings: $1 billion

The good news is that the stock is a lot cheaper now than it was a year ago – at least on a price-to-earnings basis. The bad news is that those earnings have declined almost 90%.

Perhaps the company has turned a corner, though. Facebook (FB) brought in $217 million in net income last quarter – five times what it earned in the previous quarter. And its mobile footprint is growing, accounting for 30% of total advertising revenue compared to just 23% last year.

Still, with the stock down 31% from its ballyhooed IPO, Facebook has a long way to go just to get back to break-even.