Facebook shares rallied an impressive 30% Thursday, allowing the stock to book its best one-day gain ever. And while shares remain about 10% below the May 2012 IPO price of $38, analysts are predicting that Facebook is finally on its way to reaching, and even crossing, that threshold.
"Facebook delivered its strongest quarter yet as a public company -- results that we think could be thesis-changing for many," said Doug Anmuth, a JPMorgan analyst who boosted his price target to $44 a share from $35.
Investors and analysts are most impressed by Facebook's growing strength in mobile advertising -- a part of the business they were initially most concerned about since Facebook lacked a clear strategy for mobile advertising despite the rapidly growing number of people using Facebook on their mobile phones and tablets.
"One year into Facebook's mobile advertising efforts, mobile has increased from zero to 41% of total ad revenue," Anmuth highlighted in a note to clients.
While the improvements have been gradual, Facebook blew everyone away this past quarter by generating 50% more in mobile ad revenue than what Wall Street was expecting.
Even after that stellar quarter, analysts say growth should remain strong as Facebook continues to shift toward more social ads that will become increasingly valuable to advertisers.
Analysts at JMP Securities, who increased their share price target to $38, said that social media giant's second-quarter results suggest that "Facebook is increasingly becoming a 'must buy' for advertisers."
Goldman Sachs analysts were also excited by Facebook's significant improvement in mobile advertising. They put a bullish price target of $46 on Facebook shares.
"We continue to believe Facebook is at the center of the mobile ad revolution and see considerable opportunity for it to drive higher pricing on its ad units as brand and direct marketers alike take advantage of its broad reach and precise targeting," said Goldman analyst Heather Bellini.
As Facebook (FB) shares surged, a number of investors were getting in on the action. Over 360 million shares of Facebook had exchanged hands Thursday, more than seven times the stock's average daily trading volume.
The day's surge pushed the value of Facebook to more than $80 billion, up from just over $60 billion as of Wednesday's closing bell.
Facebook's advance was also getting plenty of attention on Twitter.
Don't want to jinx it, but I'm about to break even on my IPO day $FB investment! I'm still LONG—
Ross Sheingold (@RossSheingold) July 25, 2013
$FB hasn't even started off-site ads yet. $FB creates the most relevant ads. Advertiser's will pay a premium. $FB continued rev growth.—
Fibo Waves (@Fibowaves618) July 25, 2013
Mobile advertising makes up 41% of all revenue at Facebook now. Remember the pundits who swore $FB wouldn't be able to monetize mobile?—
Joe McCann (@joemccann) July 25, 2013
Despite the solid results and big run-up, however, some in the Twitterverse remained skeptical of Facebook's future.
$FB what a hole that will one day implode. Stupid money, but congrats to those riding the wave.—
(@TraderJive) July 25, 2013
Monster rally in $FB Facebook. I'm not involved but still a doubter, don't like long term revenue prospects—
Steve Cortes (@CortesSteve) July 25, 2013
$FB up 24%. Still not sure if I will ever be in the green with that buy.—
Matthew Kammerer (@mkammerer) July 25, 2013
Still, plenty seemed to regret not having bought Facebook shares sooner.
Almost choked when I saw $FB soar this morning. I wanted in so bad at $19. Missed it.—
(@MarkinCHS) July 25, 2013
Wish I bought $FB right about now—
Kyle Russell (@KRussell142) July 25, 2013
Other social media stocks were also higher on the back of Facbeook's strong quarter. Chinese Internet social media platform YY (YY) jumped more than 11%, while Zynga (ZNGA) shares jumped 6%. LinkedIn (LNKD) and Yelp (YELP) shares rose more than 3%.
Facebook beat fourth-quarter earnings and revenue estimates, and improved mobile ad sales, but investors weren't all that impressed.
Facebook (FB) stock tanked 10% within minutes in after-hours trading following the earnings release. But the stock nearly fully recovered before edging lower again as CEO Mark Zuckerberg, CFO David Ebersman and COO Sheryl Sandberg answered questions from analysts on a conference call. Shares were down 4% at the conclusion of the call, MOREHibah Yousuf - Jan 30, 2013 6:50 PM ET
Google is reporting earnings after the bell Tuesday and all eyes will be on the search giant's expenses as it transitions deeper into other markets.
Last year, Google (GOOG) completed its biggest acquisition ever, when it paid $12.5 billion for Motorola Mobility. That deal gave Google access to more than 17,000 patents that will help keep lawsuits from Apple (AAPL) and Microsoft (MSFT) at bay.
Gaining Motorola also opened a window into MORECatherine Tymkiw - Jan 22, 2013 11:59 AM ET
The New York Times Company's stock plummeted Thursday, after the company reported a surprise third-quarter loss, driven by a 9% decline in advertising revenue.
Print ad revenue sank more than 10%, while digital ad sales fell 2% "largely due to the challenging economic environment," and a "complex and fragmented digital advertising marketplace," the company said, adding that it expects the trend to continue during the fourth quarter.
The weakness in ad sales resulted MOREHibah Yousuf - Oct 25, 2012 4:45 PM ET
Facebook's stock surged more than 19% Wednesday, marking its best one-day gain since the company went public by far, as investors welcomed a healthy boost in sales.
The social media giant delivered third-quarter sales of almost $1.3 billion when it reported earnings after the closing bell Tuesday. That's up 24% from a year earlier.
In particular, investors were impressed by Facebook's ability to earn about $150 million from mobile, accounting for 14% MOREHibah Yousuf - Oct 24, 2012 4:01 PM ET
Sina Corp., which operates China's Twitter-like microblogging site Weibo, posted a surprise second-quarter profit of $33.2 million, more than triple the amount a year ago.
The results, which included an 11% jump in revenue, blew investors away since analysts had predicted that the company would post a slim loss for the quarter. Shares of Sina (SINA), surged 14% to their highest level since May.
Sina's CEO Charles Chao noted that Weibo, which MOREHibah Yousuf - Aug 16, 2012 3:22 PM ET
Not a member yet?Sign up now for a free account
|The Deep Web you don't know about|
|AT&T cuts prices again|
|Pizza chain Sbarro files for bankruptcy|
|"True Detective" season finale crashes HBO Go site|
|Once bankrupt, Vallejo still can't afford its pricey pensions|