October 25, 2012
Facebook Stock Rises As Earnings Report Shows Improvement
Enid Burns for redOrbit.com — Your Universe Online
Investors in the social networking giant Facebook will be able to put on a happy face, as the company enjoyed its largest gain on the stock market since the company went public in May. On Wednesday, the social network saw its stock jump by 19 points at the close of trading. Shares closed at $23.23, a boost coming largely from growth in the third quarter of this year. This was the biggest single-day gain in the stock´s burgeoning history.
Investors expected Facebook to emphasize mobile efforts, as well as the significant user base across Facebook, as part of its earnings call this week. During a slideshow presentation reviewing statistics Facebook did just that.
“As proud as I am that a billion people use Facebook each month, I'm also really happy that over 600 million people now share and connect on Facebook every month using mobile devices," said CEO Mark Zuckerberg. “People who use our mobile products are more engaged, and we believe we can increase engagement even further as we continue to introduce new products and improve our platform. At the same time, we are deeply integrating monetization into our product teams in order to build a stronger, more valuable company.”
On Wednesday, stocks had reached $24 before dipping back, but still were far above the low for the company, which had performed notoriously badly since the IPO, reaching a low of $17.55.
Facebook experienced one of the most disappointing IPOs in recent history following a highly anticipated build-up. Shares of the company debuted at $38. Revenue at Facebook had fallen in the first half of the year. The social networking company still trails Google in online advertising, both on desktop and mobile.
However, the company had recently seen a turn around, which included 26 percent growth over last year by the end of September, including 61 percent growth in the mobile marketplace. The company´s revenue for the just-finished third quarter reached $1.3 billion, up from $1.18 billion a quarter prior.
To continue this momentum, analysts have noted Facebook will likely have to follow Google´s lead and roll out its own ad network that could allow marketers to reach Facebook users, wherever they are — including on mobile devices. The social network will also have to adapt more closely with mobile users and find greater ways in monetizing its efforts in the space.
Some analysts are eyeing non-advertising revenues, such as fees users pay for products and services, including its recent addition of featured posts. The new feature lets users promote their posts - for a fee - so they stay at the top of their friends' feeds.
And even with these earnings, Facebook could feel fallout from another IPO darling that turned out to be a miss instead of hit. One of Facebook´s biggest sources of payment revenue comes from online game company Zynga, which reportedly accounted for 10 percent of Facebook´s revenue this year. Zynga is currently a loser, at least as it expects to lose money in the third quarter, and that could mean less revenue flowing to Facebook.