Facebook falls as mobile ad growth fails to impress

Thu Jan 31, 2013 9:57pm IST

A women works with her computer which displays Facebook logos on the screen in Bordeaux, Southwestern France, January 30, 2013. REUTERS/Regis Duvignau

A women works with her computer which displays Facebook logos on the screen in Bordeaux, Southwestern France, January 30, 2013.

Credit: Reuters/Regis Duvignau

Related Topics

Stocks

   

REUTERS - Shares of Facebook Inc(FB.O) fell as much as 8 percent on Thursday as a surge in fourth-quarter mobile advertising revenue failed to live up to Wall Street's high expectations.

Facebook has long established itself as one of the most popular websites with more than a billion users, but investors have worried that until the company's mobile advertising strategy takes off, revenue growth will remain shaky.

Three brokerages downgraded the stock, but most analysts said investor expectations were too high and Facebook's mobile advertising business was a good long-term bet.

Shares of the company recovered some of their early losses and were trading down 3.5 percent at $30.14 in late morning trading on the Nasdaq. The stock has lost over a quarter of its value since its botched debut in May.

"We remain encouraged by Facebook's ability to attract mobile ad dollars in the young mobile display market," Nomura analyst Brian Nowak said.

Facebook CEO Mark Zuckerberg has said the company will be able to make more money from users logging into their Facebook accounts on their mobile devices than on desktops.

The company reported a better-than-expected fourth-quarter profit on Wednesday and said mobile advertising revenue doubled to $306 million, suggesting it was making inroads into handheld devices such as smartphones and tablets.

Investors were looking for at least $350 million in mobile advertising revenue, Piper Jaffray analyst Gene Munster said in a note to clients.

"While the trajectory of mobile growth may not be as steep as some investors were hoping, the theme of mobile as the future of Facebook remains intact," Munster said.

BMO Capital Markets analyst Daniel Salmon, who downgraded the stock to "market perform" from "outperform", however said Facebook's 2013 stock performance would not be dictated by its ability to generate mobile ad dollars.

He said new catalysts were necessary to drive Facebook's stock price up.

(Reporting by Neha Alawadhi and Sayantani Ghosh in Bangalore; Editing by Saumyadeb Chakrabarty)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

China's Twitter

REUTERS SHOWCASE

No-hire Trial

No-hire Trial

Tech workers seek to use Steve Jobs evidence in upcoming trial on no-hire accords  Full Article 

Apartheid-era Case

Apartheid-era Case

Ford, IBM to face renewed U.S. lawsuit over apartheid-era abuses  Full Article 

Online Banking

Online Banking

China issues banking rules to strengthen online payment security  Full Article 

Web Control

Web Control

China calls on Russia, central Asia allies to tighten Internet controls.  Full Article 

In Demand

In Demand

Microsoft's Xbox One sales cross 5 million.  Full Article 

Digital Currency

Digital Currency

Mt. Gox suitors seek support to save bitcoin exchange.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage