Facebook has reported a $151 million loss on its first earnings since floating on the share market in May.
The figures come despite a 32 per cent increase in sales.
The company is blaming the net loss on payments to shareholders, including chief executive Mark Zuckerberg.
Facebook executives say the company did generate a profit of 12 cents per share excluding compensation costs.
However, when the loss was announced, Facebook's shares plummeted to record lows in after-hours trading.
Facebook also offered no outlook or profit guidance for the current period in order to allay fears about the company's ability to boost advertising growth.
Shares in the company have lost more than a third of their value since its May debut at $US38.
The head of Facebook says the company is investing heavily in mobile apps.
Mr Zuckerberg says mobile users are more active on Facebook than PC users, so that is where the company is investing.
"[Mobile users] on average are around 20 per cent more likely to use Facebook on any given day," he said.
"So mobile not only gives us the potential to connect more people, it gives us the ability to provide more value and a more deeply engaging experience." Facebook says advertising revenue grew 18 per cent in the period helped by a 9 per cent increase in the average price of advertisements.
Chief financial officer David Ebersman says developments in its advertising products should drive future sales growth.
"There are a number of potential drivers including increasing the number of sponsored stories covered in the newsfeed across desk top and mobile," he said.
"Improvements in our ad products and better targeting capabilities.
Increased advertising demand as we demonstrate ROI [return on investment] and as our clients get better social and engaging apps and overall growth and development of online ad markets globally."