Facebook Stock Soars 25% on MOBILE-ADS
Told you folks, mobile -ads are HOT, HOT, HOT, is where we are heading on VoX Network.
Facebook’s CEO Defies Mobile-Ad Skeptics as Sales Soar
By Douglas MacMillan & Brian Womack - Jul 25, 2013 4:39 AM ET
Facebook Inc. (FB) Chief Executive Officer Mark Zuckerberg’s decision last year to bet big on mobile software is paying off, with sales of ads on wireless devices now on track to surpass revenue from desktop computers.
Surging demand for mobile advertising helped profit and revenue top analysts’ estimates in the second quarter. The results sent shares of the world’s most popular social-networking service up 21 percent in extended trading yesterday, leaving them poised for a record one-day gain today.
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A pedestrian walks past the Facebook Inc. 'like' logo displayed on a sign at the entrance to Facebook headquarters in Menlo Park, California. Photographer: David Paul Morris/Bloomberg
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July 24 (Bloomberg) -- Rob Jewell, founder and chief executive officer of Spruce Media, and David Kirkpatrick, CEO of Techonomy Media and author of "The Facebook Effect," talk about Facebook Inc.'s second-quarter earnings and outlook. Facebook reported sales and profit that exceeded estimates as it lured more advertisers to its mobile services. Jewell and Kirkpatrick speak with Emily Chang on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)
The results may finally quiet concerns, voiced by analysts and investors since Facebook’s May 2012 initial public offering, that the rising popularity of smartphones and tablets is outpacing its ability to make money selling promotions to mobile users. By letting marketers show messages in the news feed on such devices, and shifting development efforts toward applications, Zuckerberg is delivering on his promise of making Facebook a “mobile-first” company, according to Jordan Rohan, an analyst at Stifel Nicolaus & Co. in New York.
“There’s latent demand for marketers to spend money on Facebook,” Rohan, who rates the shares a buy, said in an interview. “The company finally introduced the right set of ad products to facilitate that.”
Revenue rose 53 percent to $1.81 billion in the latest quarter, the company said in a statement yesterday. Profit excluding certain items was 19 cents a share. Analysts had projected profit of 14 cents on sales of $1.62 billion on average, according to data compiled by Bloomberg.
Blowout Quarter
Facebook added 17 percent to the equivalent of $30.94 in German trading at 10:30 a.m. Frankfurt time. They rose as much as 21 percent to $31.98 in extended trading yesterday, signaling the $64 billion company may exceed its record one-day gain of 19 percent in October, according to data compiled by Bloomberg.
“Finally, the blowout quarter that Facebook bulls have been waiting for,” said Paul Sweeney, an analyst at Bloomberg Industries. “Among many impressive data points, I think investors will focus on the percentage of revenue from mobile of 41 percent, which was well above consensus.”
Facebook, which had priced its IPO at $38 a share, saw its stock slump as low as $17.55 in September and was trading 30 percent below its initial offering price before yesterday’s results. Concern about Facebook’s ability to shift to mobile has weighed on the company’s shares since its $16 billion IPO, the largest technology offering on record.
Even with the decline, the Menlo Park, California-based company traded at 115 times earnings as of yesterday’s close, more expensive than 98 percent of the companies in the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.
Mobile Push
Mobile ads, which made up 30 percent of revenue in the first quarter, will soon account for more than half of advertising dollars, Zuckerberg said on a conference call. The number of mobile users expanded 51 percent to 819 million during the quarter. The total number of Facebook members was 1.15 billion, compared with 1.11 billion in the earlier period.
“This quarter represents a strong validation that we’re effectively navigating the shift to mobile,” David Ebersman, Facebook’s chief financial officer, said in an interview. “All the investments we’ve been making in the business have been paying off.”
Facebook is projected to take 13 percent of the global mobile-advertising market this year, up from 5.4 percent last year, according to EMarketer Inc. Even so, the company remains a distant No. 2 to Google Inc. (GOOG), which is expected to grab 56 percent of the market in 2013.
Facebook has stepped up efforts with its mobile services, including updates to its smartphone applications and a new video feature for photo-sharing service Instagram.
