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 At least 32 brokerages raised their price targets on Facebook's
shares, which touched a high of $62.50 in midday trading on
Thursday.
If the gains hold to close, this would be the largest single-day
rise in Facebook's stock since July 2013. The company would have
added about $20 billion to its market capitalization of $136
billion, putting it among the top 20 in the S&P 500 index.
The highest price target among the 32 brokerages was $82, which
would value the world's largest social network at more than $200
billion.
Facebook's fourth-quarter revenue rose to $2.585 billion from $1.585
billion in the year-ago period, beating analysts' average
expectation of $2.33 billion.
"After disappointing earnings from large-cap internet stocks like
eBay and Yahoo, it was refreshing to see FB crush Q4 consensus
estimates, with accelerating trends in its core advertising
business," CRT Capital analyst Neil Doshi wrote.
Facebook said on Wednesday revenue from mobile ads represented 53
percent of its total fourth-quarter advertising revenue, up from 49
percent in the third quarter.
While the total number of ad impressions on Facebook declined 8
percent, some analysts attributed that to the company's shift to
mobile and focused instead on the near-doubling of ad pricing in the
last year.
Macquarie (USA) Equities Research analyst Ben Schachter said
Facebook had focused on improving the quality and relevance of
advertisements, rather than boosting ad load, in order to drive
revenue growth.
Facebook's latest newsfeed ads, which inject paid marketing messages
straight into a user's stream of news and content, are ideally
suited for mobile screens.
"We expect several more quarters ahead of expanding newsfeed ad
pricing, and also suspect the ad model on Facebook will continue to
evolve rapidly, leaving room for future positive surprises,"
Canaccord Genuity Michael Graham wrote.
Facebook and rival Google Inc have been looking for ways to generate
more revenue by harnessing the mobile platform, as more and more
users rely on smartphones to access the Internet.
Deutsche Bank estimated 4 billion people would be accessing the
Internet on smartphones in 2017, with spending on global mobile
advertisement set to reach $70 billion by the same year.
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GROWTH ENGINE
Facebook, which completes a decade in business next week, ended 2013
with 1.23 billion monthly active users.
Analysts identified the company's new photo-sharing service,
Instagram, as well as a new video ad format and its social search
feature, dubbed as graph search, as the next big areas of growth for
Facebook.
Facebook launched its first ads for Instagram during the quarter
just ended, and has also started testing video ads with brand
marketers.
"We continue to see two major catalysts in Instagram and video ads,
which could be FB's next billion-dollar business," Jefferies
analysts wrote in a note.
Wall Street has been counting on video ads to open up a potentially
lucrative market as Facebook tries to sustain its rapid growth. This
market is considered crucial for Facebook's market valuation, and
poses a potential long-term threat to traditional TV networks.
Zuckerberg has enlisted Samsung Electronics Co Ltd, Qualcomm Inc and
other technology companies to help him in a project aimed at making
Internet access affordable for people not already online.
One area of concern to Facebook has been that teenage users might be
drifting to new messaging services, such as Snapchat and WhatsApp.
After spooking some investors in October by saying it had noticed a
decrease in daily users among younger teens, Facebook did not
disclose teen usage data for the fourth quarter.
"The company's Messenger product grew users 70 percent in the last
three months and we think this could potentially help re-engage
teens over time," JPMorgan analyst Doug Anmuth said.
(Additional reporting by Chandni
Doulatramani; editing by Robin Paxton and Saumyadeb Chakrabarty)
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