Facebook: Finally Making Financial Sense

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The Q2 2013 earnings report was important for Facebook (FB) and marked a landmark in the financial journey of the social giant. The biggest problem the company faced since the Facebook IPO had been the firm’s inability to monetize its fast growing mobile user base. This little problem had in short wrecked one of the most hyped  IPO in the technology space. A year, which saw the Facebook stock fall to half its IPO price, has gone by and Facebook seems to have solved the mobile users monetization puzzle with the company reporting 41% of advertising revenues in Q2 2013 from mobile advertising. The importance of monetization of Facebook’s mobile user base can be gauged from the fact that the stock has jumped by 58% since July 24th, the day the company released its Q2 2013 results. Such has been the buying frenzy post the Facebook earnings announcement that the Facebook stock has achieved a market cap of $100 billion for the first time since before its IPO. The Facebook stock closed at $41.34 on Monday to record a one day gain of 1.95%.

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Source: Facebook stock chart by Amigobulls

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Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice.

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Comments on this article and FB stock

Well it is true that Facebook has a long way in generating revenue per user to match that of Google. However consider the fact that about a year ago the company did not have a model to monetize their mobile users and leverage on their growth in this area. And we have to agree this is one step in the right direction. I do believe this quarter to be a significant quarter in the financial history of Facebook. The company is well on the right way and i believe the stock isnt off that trail.
Facebook's problems will not be only mobile monetization, the question is how it can make itself relevant to advertisers. Google makes far more money per user than Facebook and ironically users spend a lot more time on facebook where as they just get out of google search in seconds!
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