Mobile Ads Drive Facebook Shares to New High

Facebook Inc.’s shares have risen as much as 16 percent to a lifetime high, following a strong surge of revenue growth that’s been attributed, at least in part, to CEO Mark Zuckerberg’s recent success in selling ad space on Facebook’s mobile app. In early trading on Thursday, January 30, Facebook shares touched a high of $62.30 as at least 30 brokerages raised their price targets. With the highest price target at $82, this has the potential to value the world’s largest social network at over $200 billon.

In addition, Facebook’s revenue in the fourth quarter rose to $2.585 billion (from $1.585 billion a year ago), beating analysts’ expectations of $2.33 billion. According to a Facebook spokesperson, revenue from mobile ads represented 53 percent of its total fourth quarter advertising revenue, up from 49 percent posted in the third quarter. Interestingly, this does not reflect an increase in the quantity of ads, as the total number of Facebook ad impressions declined 8 percent (a drop that some analysts believe can be attributed to the company’s shift to mobile). Rather, Facebook has been focusing on enhancing the quality and relevance of the ads posted rather than ad load in order to drive the revenue growth.

There have been several new trends that have recently emerged in the world of Facebook mobile advertising as the company looks for ways to generate more revenue via mobile platforms. Facebook’s latest newsfeed ads actually inject paid marketing messages straight into the user’s news stream, making them ideal for mobile screens. In addition, Facebook launched its first ads for its photo sharing service Instagram during this past quarter. The company has also started testing video ads with brand marketers. According to many market analysts, the expansion of this video ad market is considered crucial for Facebook’s market valuation. Facebook’s new social search feature (called a graph search) is likewise seen as the next big area of growth for the social networking company.

Facebook will celebrate 10 years in business next week and ended the year 2013 with 1.23 billion monthly active users.

References:

Mukherjee, Supantha. “Facebook Shares Surge as Mobile Ads Click.” Yahoo! News. 1/30/14.

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