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Facebook "on the right track"

  • 26 July 2013
  • Written by 
  • Published in Market

Mark Zuckerberg is once again steering Facebook in the right direction, if analysts and share prices are to be believed.

Zuckerberg announced a second-quarter profit for his company on Wednesday, exceeding analysts' expectations and demonstrating the company is on the way up, not down.

The company's sales rose to $US1.81billion, a 53% increase from the previous quarter. Analysts had predicted a figure of $1.62billion.

Facebook stock hasn't exactly been doing well since the company went public in May 2012, and has been the constant butt of jokes and media speculation. On Wednesday, however, shares skyrocketed 20% to $31.81 during after-hours trading.

"We've made good progress growing our community, deepening engagement and delivering strong financial results, especially on mobile," Mark Zuckerberg, Facebook's founder, said in a statement. "The work we've done to make mobile the best Facebook experience is showing good results and provides us with a solid foundation for the future."

Analysts agreed that the social media behemoth was on the right track, with Ovum's Principal Analyst Shiv Putcha describing the results as "trending in the right direction."

“The story of Facebook’s Q2 results is one of progress, regeneration and strategic investment," Putcha said in a lengthy statement:

"Coming off a poor run of results post IPO, investors were rightly anxious for signs of revenue progress at Facebook. This concern has been addressed more than adequately with earnings of US$1.81 billion for the quarter, well above analyst consensus expectations. The 53 percent QoQ sales growth includes significant progress on the core strategic issue facing Facebook. Namely, how to drive advertising revenues from its increasing mobile traffic. Facebook’s mobile revenues came in at US$656 million, which amounts to 41 percent of its total ad revenue base. More importantly, it is a significant 11 percent jump QoQ and indicates that Facebook is trending in the right direction as the business begins its pivot to mobile.

"Facebook also addressed concerns about declining momentum in both its user acquisitions but also engagement. The Q2 numbers indicate the daily active users increased 27 percent YoY to 699million as Facebook becomes increasingly popular in new markets around the world. Engagement also seems to be improving with Facebook claiming the ratio of daily active users to monthly has improved. Besides the new found momentum in consumer subscriber acquisitions, Facebook is also making inroads into the local business community which will be a significant driver for ad sales.

"Finally, Facebook continues to invest in new products especially video. While no specifics were offered on services like Instagram Video and video ads on the News Feed, Facebook is reporting strong growth in users and their focus on growth over revenues from these new segments. Other products like Facebook Home have not had much success at all. Overall, despite strong progress in ad sales and success in mobile, Facebook still has a lot of work to do as it strives to increase its share of the digital advertising market and also maintain its progress on the mobile business.”

Facebook's latest update has been its graph search, which should be available either already or very soon if you're a US English user.


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