) reached a new 52-week high of $38.31 on Wednesday, Jul 31,
2013. Most significantly, for the first time since its Initial
Public Offering ("IPO"), Facebook succeeded in crossing the
psychological barrier of $38.00, the high end of its IPO price
Facebook's IPO on May, 18, 2012 was spoiled by mismanagement and
technical glitches that cost
s and investors millions of dollars. Although the stock debuted
at $42.05, it closed the IPO day with a gain of only 23 cents.
Facebook's sky-high valuation, unproven monetization efforts on
the mobile platform and a slow advertising growth rate were
blamed for the modest gain. Following the debacle, the company's
share price plunged to a 52-week low of $17.55 on Sep 4, 2012.
However, the company's focus on improving mobile exposure helped
the shares rebound over the next 5 quarters. Facebook shares have
surged 87.1% compared with 25.0% increase for the S&P 500
over the last 12 months.
Moreover, the impressive second quarter results further helped
Facebook to reach its 52-week high. The bullish run has been
primarily driven by increasing mobile offerings, which boost
customer engagement. The launch of the mobile App center for
) iOS and
) Android-based devices helped Facebook to expand customer base
To boost customer engagement in mobile, Facebook launched
Twitter-like hashtags (#), Facebook Home and Instagram's video
application. The company has also launched a number of new
products to woo advertisers.
These offerings have significantly improved its customer base,
which attracted advertisers. At the end of the second quarter of
2013, monthly mobile active users (MAUs) were 819 million, up
51.0% from the year-ago quarter. The "Facebook for Every Phone"
initiative recorded more than 100 million active users.
More importantly, mobile ad revenues contributed 41% of total ad
revenues. We believe that this is a significant achievement for
Facebook within a very short span of time. Facebook did not
report any mobile revenues at the time of its IPO.
We believe that Facebook's massive mobile user base represents a
tremendous growth potential. We also expect the company to
continue to pursue strategic acquisitions that will help it to
further monetize this huge user base.
Moreover, the upcoming new products such as the Reader and
television-like spot offerings for advertisers (reportedly for
$2.5 million a day) are expected to drive top-line growth going
forward. Additionally, improving customer engagement will help it
to aggressively compete in the ad market against the likes of
Currently, Facebook has a Zacks Rank #1 (Strong Buy).
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