Facebook wins back friends on Wall Street, shares surge 20%
Reuters | Updated On: October 25, 2012 08:37 (IST)
New York: Facebook Inc's shares headed towards their biggest one-day jump on Wednesday after the company reported a surprising rise in mobile advertising, easing concerns it was having trouble capitalizing on soaring use of smartphones and tablets.
Facebook shares were up 21 percent at $23.55 in afternoon trade. They were sold for $38 each in their initial public offering in May but slumped to a low of $17.55 in September as investors fretted about the company's slowing growth. Several brokerages raised their price targets on Facebook shares. Barclays Capital raised its target to $26 from $23, Jefferies & Co to $32 from $30 and Macquarie Equities Research to $24 from $21.
Citi Investment Research upgraded the stock to "buy" from "neutral". Facebook, which reported third-quarter results on Tuesday, said it now gets 14 percent of its advertising revenue from mobile ads, a far bigger increase than mostly skeptical analysts had expected. Mobile advertising has been a key investor concern hanging over Facebook, shaving more than $50 billion off its market value since its IPO. The world's largest social network passed 1 billion active users in September but failed to dispel doubts about its mobile strategy.
Chief Executive Mark Zuckerberg, who has himself lost billions of dollars on paper since Facebook's market debut, said on Tuesday that the mobile opportunity was "the most misunderstood" aspect of Facebook's business. "In baseball parlance, Facebook hit two doubles; advertising revenue growth accelerated for the first time in at least six quarters (maybe more), and mobile revenues are moving the needle positively following the launch of new ad formats," Robert W. Baird & Co analyst Colin Sebastian wrote in a note. Zuckerberg hinted in September that the company was "halfway through" a cycle to "retool" and offer new advertising products................
Facebook shares were up 21 percent at $23.55 in afternoon trade. They were sold for $38 each in their initial public offering in May but slumped to a low of $17.55 in September as investors fretted about the company's slowing growth. Several brokerages raised their price targets on Facebook shares. Barclays Capital raised its target to $26 from $23, Jefferies & Co to $32 from $30 and Macquarie Equities Research to $24 from $21.
Citi Investment Research upgraded the stock to "buy" from "neutral". Facebook, which reported third-quarter results on Tuesday, said it now gets 14 percent of its advertising revenue from mobile ads, a far bigger increase than mostly skeptical analysts had expected. Mobile advertising has been a key investor concern hanging over Facebook, shaving more than $50 billion off its market value since its IPO. The world's largest social network passed 1 billion active users in September but failed to dispel doubts about its mobile strategy.
Chief Executive Mark Zuckerberg, who has himself lost billions of dollars on paper since Facebook's market debut, said on Tuesday that the mobile opportunity was "the most misunderstood" aspect of Facebook's business. "In baseball parlance, Facebook hit two doubles; advertising revenue growth accelerated for the first time in at least six quarters (maybe more), and mobile revenues are moving the needle positively following the launch of new ad formats," Robert W. Baird & Co analyst Colin Sebastian wrote in a note. Zuckerberg hinted in September that the company was "halfway through" a cycle to "retool" and offer new advertising products................
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