Shares of Facebook Inc. (FB) reached an all-time high of $45.09 on Wednesday, Sep 11, 2013. Since crossing the psychological barrier of $38.00 on Jul 31, the high end of its Initial Public Offering (“IPO”) price range, Facebook shares have surged 17.6% over the last 7 weeks.
Facebook shares surged 115.2% compared with 15.7% increase for the S&P 500 over the last 12 months. Year-to-date, shares increased 60.9% compared with 15.5% increase for the S&P 500. Average volumes of shares traded over the last three months were 58593K.
Facebook’s stupendous growth has been primarily driven by its improving focus on mobile monetization. Moreover, the impressive second quarter results further helped Facebook to reach an all-time high.
The bullish run has been primarily driven by increasing mobile offerings, which boost customer engagement. The launch of the mobile App center for Apple’s (AAPL) iOS and Google’s (GOOG) Android-based devices helped Facebook to expand mobile customer base quickly.
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 Google and LinkedIn (LNKD).
The Zacks Consensus Estimate for the third quarter has surged 44.4% (4 cents) to 13 cents over the last 60 days, as 9 out 11 analysts raised their estimates. For fiscal 2013, the Zacks Consensus Estimate has jumped 28.2% (11 cents) to 50 cents over the last 60 days, as 8 out 11 analysts raised their estimates.
Currently, Facebook has a Zacks Rank #2 (Buy).
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