Facebook investors are feeling good about their shares after the social networking firm rose 1.5 percent to close at $38.05, above the IPO. Facebook was initially a marketing disappointment that is finally seeing new light.
The company came public amid great fanfare as many individual investors figured the company’s connection with a billion users worldwide would quickly turn it into a money making machine.
Investors awarded the company with a lofty valuation of more than $90 billion as it seemed the company’s future was boundless.
However, concerns grew that the company would face difficulty making the transition to mobile users, as it could be harder to place advertisements on smartphone screens.
But after the company reported sharply higher quarterly profit as week, topping expectations largely on better-than-expected performance in mobile advertising, the negative pall on the stock eased.
Even so, Facebook’s comeback this year has been breathtaking. The stock is up 43% and its market value has risen to $92 billion. It also ranks as one of the most valuable U.S. companies behind McDonald’s at $99 billion and ahead of United Parcel Service at $83 billion.
“We’ve made good progress growing our community, deepening engagement and delivering strong financial results, especially on mobile,” Facebook founder and CEO Mark Zuckerberg said.
The highlights from Facebook’s latest results make it easy to understand why Wall Street has decided to invest in the stock again.
Facebook’s daily active users (DAUs) were 699 million on average for June 2013, an increase of 27 percent year-over-year. Monthly active users (MAUs) were 1.15 billion as of June 30, 2013, an increase of 21 percent year-over-year. Mobile Monthly active users (MAUs) were 819 million as of June 30, 2013, an increase of 51 percent year-over-year.
The company also added that it now has more than 1 million active advertisers on the site.
So for the patient investor and the faithful fans of Facebook, this is a good day. A day to say, “I told you so.” A day to believe that this is the start of a surge that will bring it big profits in the weeks and months to come.
But it’s also a day to remember that while Facebook has recovered, there have been lots of social media stocks that have crushed investors’ dreams. The two most recent ones that come to mind are Groupon, which is down 50 percent since its IPO, and Zynga, down almost 69 percent since it went public.