Facebook shares soar as users, mobile ads climb

Facebook shares soar as users, mobile ads climb
Published: 25 July 2013
SAN FRANCISCO - Facebook Inc delivered strong evidence it can thrive on smartphones and tablets on Wednesday, reporting a much better-than-anticipated surge in mobile advertising revenue in the second quarter that ignited a nearly 17 percent share rally. The world's No. 1 social network also reported an uptick in daily visitors to its service, allaying worries that a new crop of fast-growing mobile upstarts like WhatsApp and Snapchat could cut into the time consumers spend on Facebook.

Facebook's growing appeal to consumers and advertisers combined to deliver the company's strongest ad revenue growth since the third quarter of 2011. Ad prices, which declined at Google and Yahoo, increased 13 percent at Facebook. "Facebook has nearly 700 million people that use the platform daily. There's no bigger audience on the planet," said Jordan Rohan, an analyst at financial services  firm Stifel Nicolaus. Facebook said revenue from e-commerce companies doubled year-on-year in the second quarter, and the total number of ads displayed on its service expanded by 43 percent year-on-year.

The quarterly results, which also showed a spike in operating margin to 31 percent, shore up investors' confidence in a company which has struggled to fully regain credibility after a rocky May 2012 initial public offering. Despite Wednesday's rally, it remains nearly 20 percent below its debut price. Mark Zuckerberg, the 29-year old chief executive who co-founded Facebook in his Harvard dorm room, said the company was beginning to reap the benefit of investments to retool certain products over the past 18 months, particularly the mobile version of its service.

"Coming into this year we could tell internally that we were turning a corner on that, that we were in good shape and could start to play a bit more offense," Zuckerberg said in a conference call with analysts on Wednesday. Facebook said about 61 percent of its 1.15 billion users now visit the service on a daily basis, compared to 58 percent in the second quarter of 2012. That increase came despite worries that in-feed ads will alienate viewers, and that a new crop of mobile services popular among a younger crowd, such as Snapchat, would siphon off users.
- Reuters
Tags: Facebook, Ads,

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