Why Facebook Stock Is at All-Time High

Mobile ad revenue game changer for social media giant
By Catherine Yang, Epoch Times
September 13, 2013 9:07 am Last Updated: September 13, 2013 9:08 am

Facebook Inc. shares reached a new all-time high at $45.50 Thursday after dramatic ups and downs since the company went public last year. 

Months after Facebook’s initial public offering last year, shares dropped to an all time low of $17.55 last September, with investors and users disappointed by the company’s mobile strategy. The stock closed at $44.75 Thursday.

Last year Facebook changed to a mobile-first strategy and has since then made drastic improvements to the Facebook app and its advertisements on smartphones. Mobile advertising revenue made up 41 percent of total ad revenue for the second quarter of 2013.

Furthermore, the company introduced Facebook Home in April, a separate application integrating Facebook into your Android phone instead of relying on an isolated application. 

The next phase plans to include ads there as well.

CEO Mark Zuckerberg feels experimenting and testing features and products quickly is an important part of the process. He would rather release a feature quickly and fix it on the go than “perfecting” something before release, he said Wednesday at Techcrunch’s Disrupt SF conference in San Francisco, Calif.

“What I want to optimize most is learning the most, and having the best products five, six, seven years from now,” Zuckerberg said. “I think it leads to interesting outcomes.”

The engineers at Facebook are encouraged to test new features in small groups and survey users immediately. Then based on the response they can very quickly implement what works and see what doesn’t, Zuckerberg said.

“I want to empower people at the company to try stuff out,” he said.

Financial option specialist Ralph Fogel thinks that in terms of mobile, Facebook isn’t doing anything wrong. He expects mobile ad revenue to grow to 61 percent this year. He also believes the stock is riding positive momentum to new highs.

“The stock has no resistance. They’ve seen lower lows and higher highs. … I expect $70 sometime in the next 12–18 months,” Fogel said. 

Facebook’s mobile traffic in minutes went up 34 percent in July, compared to last year, while desktop usage went down around 31 percent. 

According to analysts at Bank of America Merrill Lynch, Instagram plays a major part in Facebook’s growth. The photo-sharing app has yet to start making money and ads are soon to come. Around 45 million photos are shared per day and 5 million videos were uploaded in the first 24 hours of introducing video on Instagram.

“We expect Facebook to gain share in advertising markets,” the report stated.

While Zuckerberg doesn’t want to get every person in the world onto Facebook, he is optimistic in getting every person online. Only a third of the people in the world have Internet access, and annual growth is only about 10 percent, Zuckerberg said. “It’s an underestimated problem.”

“This is why we are here,” Zuckerberg said. “We are on this Earth to connect everyone, and we will do this.”

He says Facebook isn’t for everyone, but “everyone wants to be connected,” Zuckerberg said. “It’s a fundamental thing.”