Facebook stock back at $38 per share after results surprise
After a difficult year and a poorly handled IPO, Facebook's stock is back to where it started from — $38 per share.
Facebook floated in June 2012, and the price immediately started to fall. It reached a low of $17.55 on September 4, 2012. However, a week ago, the stock price started to climb, reaching a high of $38.31 today.
Facebook has exceeded analysts' expectations after releasing its quarterly results. It announced higher-than-expected earnings, and a strong revenue stream from mobile advertising.
This quarter to June, Facebook generated $656 million from mobile advertising from an ad revenue figure of $1.6 billion. Facebook generated virtually no revenue at all from mobile ads at the start of 2012.
This is impressive.
It is certainly much more impressive than analysts had predicted, leading to a rush to buy shares.
Facebook's market value suffered in the months after the IPO. The chaos of its first day of trading meant some investors ended up paying over the $38 offer price in the rush to buy shares. Worries about its lack of mobile revenue and its plans for growth concerned investors.
Worldwide mobile usage has increased considerably, too, which could pave the way for further growth. Monthly active users (MAUs) who accessed Facebook on a mobile device increased 51 percent to 819 million as of June 30, 2013. This figure is up from 543 million.
There were 219 million mobile MAUs who accessed Facebook solely through mobile apps or by accessing the mobile website during the month ended June 30, 2013. This represents an increase of 16 percent, up from 189 million mobile MAUs during the month ended March 31, 2013.
The remaining 600 million mobile MAUs accessed Facebook from both personal computers and mobile devices during that month.
Facebook also anticipates that the rate of growth in mobile device usage will exceed the growth in usage through personal computers for the foreseeable future.
It also predicts that the usage through personal computers may be flat or continue to decline in certain markets, including key developed markets such as the United States.
On its quarterly filing, it expects this to be in part due to its focus on developing mobile products to encourage mobile usage of Facebook.
This year, a new report predicts that Facebook will bring in over $2 billion in mobile ad revenue that accounts for 12.9 percent share of the global net mobile advertising market. In 2012, Facebook had 5.35 percent of the worldwide ad revenue share.
For investors that bought shares at $18, this is great news. But for small investors buying at the top of the market, there may be some way to go before the shares start to live up to the hype.