Facebook's Q2 Expectations Just Moved Lower On Zynga Miss

The bar is set low for Facebook for its fist-ever earnings report -- and now even lower after Zynga's dismal results. Those basement-level expectations could make it easier for Facebook

to hit hit top-and-bottom line numbers, preventing another letdown for investors in the social media pioneer. It seems fair to say that The Hooded One -- CEO Mark Zuckerberg -- has disappointed shareholders so far. He showed up in a hoodie to the company's IPO roadshow, stirring doubts about how much he valued the investors in his company. And Facebook's touted IPO at $38 has flopped so far, down 23% since its debut as the Street is polarized about its growth prospects. Expectations just got pushed lower. Facebook shares are down 7% near $27 in premarket trading following second-quarter results from its games partner, Zynga

. Second-quarter bookings at Zynga were about $302 million, missing expectations by about 10%, as social gaming growth slowed. Social gaming is about a quarter of Facebook's revenue, and much of that is tied to its lead games provider. Facebook is in the midst of broadening its game offerings and depend less on one company. Yet it is unclear how much it was able to mitigate Zynga exposure in Q2. The Zynga-related metric to watch will be Facebook's payments revenue, expected to be about $200 million. Analysts are expecting second-quarter earnings of 12 cents a share on revenue of $1.16 billion, on average. Guidance also will be key – if the company offers any. The company may take a Google-like

stance on that subject and leave it to analysts to decide. If Facebook does not guide, that could help make future earnings estimate ranges wider, and thus stock movements on earnings reports possibly more volatile in the future. There will be many other metrics to watch: Revenue growth is foremost among them. Expectations are for 25% growth in Q2. Keep in mind, that's roughly in line with what Google reported. Facebook may be facing pressure to beat that growth number more than any other, considering Google trades at less than a third of Facebook's 15x sales multiple. Average revenue per user (ARPU) was about $1.20 in the first quarter, but higher in the U.S. and Canada. Any sort of sequential progress on ARPU will likely be seen as a positive. Investors want to see progress – and a plan – toward monetize the vast user base over the long term. The company had 901 million users as of Q1, up 33% from the year-ago period. Daily active users were 526 million, up 41% year-ago. Mobile users were 488 million, up 69%. Facebook will be expected to show progress -- and no big growth slowdowns -- on all metrics. It's more than just a race to a billion. Investors will want to map out its growth for the long term, so the user metrics are still being watched very carefully by analysts.