Thursday, October 25, 2012

Facebook Inc (NASDAQ:FB) Bounces Right Back On Results

Facebook Inc(NASDAQ:FB)’s the social networking site had gone through one tribulation after another. The shift to mobile users had left the site on shaky grounds, since their advertising format did not really show as much on mobile devices. From its one billion users, six hundred million accessed the site through their phones, prompting advertisers to get up and walk out. Investors were worried about the future revenue sources for the site, and stock prices were going down rapidly. The revenue was declining very steadily. But after many quarters, the site has shown drastic improvement, after the company revealed the success of mobile advertising through the use of “sponsored stories”.

On Wednesday, analysts were made to take back their words, and investors heaved a sigh of relief, when the site announced the success and growth of mobile advertising, thus placating the doubts worldwide. The share prices went up by 19 percent in Wednesday's session. This may not be as good as the prices which the company started out with during its Initial Public offering, which was $38 this is definitely a good sign, after the company had hit $17.55 during the month of September. Following this, the brokerages have also started showing their hopes for the company. Jefferies & Co raised their target on the site from $30 to $32, Macquarie Equities Research raised theirs from $21, to three more dollars, and Barclays Capital did the same from $23.

The third quarter results for Facebook were announced on Tuesday, which showed a clear 14 percent revenue growth through mobile advertising. Apart from the sponsored stories, the company has also entered the world of e-commerce by selling things on the site, through features such as “Gifts”, amongst many others. Analysts are now saying that if the company manages o use these tools smartly, they will definitely get increased amounts of revenue with time.

The problem with the shift to mobile devices is not exclusively Facebook’s problem. Google and Yahoo are also  facing similar issues with regard to the shift to smartphones and Tablets. 

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