Facebook (FB), the social networking service and Website launched in 2004 in the dorm room of Mark Zuckerberg, the high-profile chief executive, issued its first quarterly earnings release after the stock market closed yesterday, and the news was hardly awe inspiring, as the issue sold off in after hours trading and the carnage has continued in the early going this morning. The results were not bad, and in some respects were actually good, but they were not what Wall Street expected, and in the unforgiving world of investing, that is the important outcome. The markets are quick to judge and are not always ready to do so in a charitable way in this tenuous world of investing, especially when dealing with high-multiple stocks.

Disappointments are becoming all-too-commonplace for Facebook. On the day of its IPO, these shares shot up to $45, but have been on a downward spiral ever since. Allegations that the initial public offering was mishandled by the bankers leading the proceedings have been rampant on Wall Street, and the common perception is that the average investor was left out. With that, FB has not been making many "friends" in the investment community.

Fast forward to the June-quarter earnings release, and again the naysayers are out in droves. The shares are now trading under the $23 mark. The slide began when game developer Zynga (ZNGA) released disappointing results (Facebook is the primary platform for players to use Zynga's games) and was exacerbated at the close of that same day when Facebook came out with figures that were in-line, for the most part, with what the Street was expecting. However, the numbers did not bowl anyone over, as many had expected, and thus a sharp selloff ensued. Some bears are saying that the issue could trade into the mid-teens or lower.

Taking a closer look at the June results, Facebook reported a 32% increase in quarterly revenues, to $1.18 billion. The consensus expectation was $1.16 billion. Advertising revenues rose 28%, to $992 million, while revenues from payments and other fees rose to $192 million. For comparisons' sake, we will point out that the company generated $1.06 billion in total revenues for the first quarter of 2012. Second-quarter net income on a non-GAAP basis, which excludes share-based compensation and other items, came in at $295 million, or $0.12 a share, a penny higher than the average estimate. The GAAP loss was $157 million or $0.08 a share. This figure was driven by $1.1 billion in variable compensation, an amount that should drop to under $200 million in the third quarter.

These figures do not seem like the type that would precipitate a run on the shares, but that occurred nonetheless. Facebook is a different type of animal and analysts are going to have to get under the hood if they want to get a better look at the company's overall strength. For example, FB ended the quarter with 955 million monthly active users. This is a 29% increase compared to last year's 739 million users and compares favorably to the 901 million users on board at the end of the first quarter. Daily active users, a clearer indication of the amount of people who spend a considerable amount of time on the site and a better gauge for potential advertising deals, were up 32% to 552 million users. That number is 26 million higher than in the March interim.

Again, at first blush these results look solid. Still, the investment community is likely going to focus on growth prospects as well as the company's ability to monetize its subscriber base in the early stages of its new status as a publicly traded company. In these figures will lie the deciding vote if Facebook can blossom from a great idea into a great business. With that, revenue growth is slowing. North America and Europe have already transformed into mature markets, with North America's average revenue per user (ARPU) coming in at $3.20 a share for the quarter. On a global scale, however, this figure drops to $1.28 per user. In Asia, where the company is growing fast, ARPU is a paltry $0.55. This metric needs to incline steadily in order to spark some enthusiasm within these shares.

One issue is that, particularly here in the States, most users are accessing the site through a mobile device, and investors are concerned about the company's ability to monetize growth in the mobile realm. Clearly, advertising space and impact are influenced when the screen is smaller, and in a perfect world for the company every user would use a computer, but that is not a possibility and actually goes against FB's "stay connected" mentality.

From a completely different perspective, initial criticism is that management offered nothing to help investors navigate through the earnings release. People need to understand that this is not your father's blue chip, this stock will probably not sway on earnings and revenue. If Facebook wants a place among the elite technology companies of the world such as Apple and Google it will have to earn it by building a solid track record on fundamentals. If it can do that, we are certain the investment community will "like" the shares much more.

So where do investors go from here? Clearly, this is a new sort of company. And the old rules may not apply in some respects. However, for a market that is worried by the unending soap opera in Europe, the fractious political divide in our country, and worries about the sluggish pace of economic activity over here - concerns which were not assuaged by this morning's report of an unprepossessing 1.5% rate of GDP growth for the recently concluded second quarter - the days of giving even a new concept a lengthy period of grace may be over.

Our sense is that Facebook likely has a bright future, and the stock could yet prove rewarding for patient, venturesome holders. But for now, the burden of proof seems to be on the battered bulls who have taken a serious hit, not only in the past 24 hours, but since this new issue made its underwhelming debut during the spring. They may well need some fortitude, for what seems almost certain to continue to be a volatile ride.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.