In the year since the company’s IPO, Facebook (FB - Analyst Report) shares have been under significant pressure. First, it was the initial day trading issues, then it was questions over growth and the ability of the company to profit off of an increasingly mobile user base.
These concerns helped to push the stock to a low of $17.55/share, although the company had since rebounded and was trading around the $26.50/share mark, giving the firm a nearly double digit loss for the trailing one year time frame. This sluggish trading made yesterday’s earnings report vital for the company—especially in light of choppy big tech earnings this quarter—and FB did not disappoint.
FB Earnings in Focus
In the latest release, FB posted earnings of $0.13/share, well above the Zacks Consensus Estimate of nine cents a share. This represents a huge increase from both the year ago and previous quarters too, while revenues also crushed estimates with $1.83 billion reported compared to an estimate of $1.61 billion.
The real promise from this report though came in the mobile segment, which was long an anchor for FB shares. This segment made up 41% of total ad revenue for the quarter, which was both a huge jump from the previous quarter (30% of revenues) and the year ago period (almost nothing).
With this incredible performance out of mobile, many are now feeling more bullish about the stock and its outlook for the future. In fact, shares were up over 25% in the first hour of trading on volume that was far above normal. While this is still below the IPO price, there is now hope for the stock in the near term, something that investors haven’t been able to say for quite some time about FB.
But what do you think about Facebook?
Is this company’s remarkable performance on the mobile segment enough to sell you on the shares, especially since it has a Zacks Rank #2 (Buy) and it is much better positioned than firms like from this perspective?
Or are you viewing this as a great quarter that can’t continue, and that the company is just too overbought?
Let us know in the comments below!
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>