Facebook stock shot to record highs Thursday, a day after the social network showed off continued booming revenue and profit growth in 2013.
Shares jumped to close at $61.08 on Thursday, cracking the $60 level for the first time and pushing Facebook’s market cap higher than $150 billion.
Facebook sold its initial batch of shares for $38 in May 2012, but the price slipped in its second day of public trading and stayed lower than that price for more than a year, amid pessimism about the Menlo Park company’s ability to monetize its mobile popularity and maintain high growth rates. With Wednesday’s earnings report, though, such doubts seem to be well behind Facebook.
Facebook’s revenue and profit growth actually increased for the third consecutive quarter, according to Wednesday afternoon’s report, thanks to big improvements in mobile use and sales. Fourth-quarter profit soared more than 700 percent, to $523 million, from the year-end quarter a year before, while revenue rose 63 percent, to $2.58 billion. For the full year, profits increased more than 270 percent, to $1.5 billion, while revenues grew 54.6 percent, to $7.87 billion. Revenue and profit growth increased each of the past three quarters.
“So it turns out that a massive and engaged user base with relevant ads can generate a lot of revenue growth,” Macquarie Securities analyst Ben Schachter wrote Tuesday, in a note titled, “Usage + Relevant Ads = Wow!” Schachter reiterated an “Outperform” rating and increased his price target from $62 to $73.
Beyond financial growth, Facebook’s most prominent gains came in the mobile field, with founder and CEO Mark Zuckerberg saying Wednesday, “2013 was the year we turned our business into a mobile business.” Mobile advertising revenues cracked $1 billion on their own and accounted for more than half – 53 percent – of Facebook’s overall ad revenues, while well more than half of Facebook’s 757 million daily visitors used the service on mobile devices, as advertisers targeted the social network during the year-end shopping season to lure shoppers.
Facebook’s gains were “driven by mobile monetization,” Robert W. Baird analyst Colin Sebastian concluded in a Tuesday note.
“More advertisers are allocating or increasing budgets to Facebook, we believe largely due to improvements in ad quality and performance,” Sebastian wrote. He maintained an “Outperform” rating on Facebook and increased his price target from $54 to $65.