Anorak News | Facebook mobile results lead to stock soaring 17%

Facebook mobile results lead to stock soaring 17%

by | 2nd, August 2013

THE big thing no one was really sure about with Facebook was how it was going to deal with the move to mobile. The recent results give us some insight into that and the shares have risen 17% as a result.

On Wednesday, Facebook easily beat second-quarter profit and sale expectations, sending its shares up 17% in late trading. The company swung to a profit as its sales rose 53% to $1.81 billion from a year ago, boosted by a surge in mobile and local ad sales. The company booked a profit of $333 million, or 13 cents a share.

Here’s what the basic problem was. Yes, we know there’s a billion people with Facebook pages, yes, we know that some large part of that number use the site a lot. But Facebook makes money through advertising and through adertising only. So, if people start to move off the nice large screens of their desktops and onto the teensie little ones of their mobiles, where is the room to stick the ads? This really was the worry that the market had over Facebook: how do you make money from advertisin when there’s no damn room to show an ad?

The answer seems to be that there is in fact enough room to show an ad on a mobile screen. And also that advertisers are willing to pay to show such ads. So, given that this uncertainty is now not so uncertain, the shares rise.

And that’s really about it, that’s the story.

Posted: 2nd, August 2013 | In: Money Comment | TrackBack | Permalink