BUSINESS

Facebook blows the market away with 2nd-quarter gains from mobile advertising

07/25/2013 11:20 EDT | Updated 09/24/2013 05:12 EDT
Facebook shares soared 30 per cent on Thursday after the social media giant pushed aggressively into mobile advertising and reported much-improved second-quarter revenue and profit.

The stock is trading at levels not seen since shortly after Facebook's initial public offering last year. The IPO was plagued by nagging questions about whether the world's biggest social network could follow users on to the mobile phones and tablets that have upended the technology sector.

Facebook began showing mobile advertisements for the first time last spring. It reported after the market closed Wednesday that those ads accounted for 41 per cent of its total advertising revenue in the most recent quarter.

Overall revenue jumped 53 per cent to $1.81 billion for the period. It also reversed a year-ago loss.

Those numbers evaporated doubts about Facebook's ability to capitalize on the mobile market, and trading volume in company shares rocketed Thursday.

The company's stock jumped 30 per cent in Thursday's trading to close at $34.36.

Facebook Inc., based in Menlo, Calif., priced its stock at $38 when the company went public in May 2012.

Goldman Sachs said Thursday that with concern about the company's growth prospects compounding monthly, everyone had been waiting for a breakout quarter.

The recent quarter, Goldman believes, should help mitigate those fears.

In addition to Goldman Sachs, Deutsche Bank, BMO Capital Markets and Jefferies & Co. raised their price targets for the stock.