Shares of Facebook Inc recovered from an 8 percent slide on
Thursday, finishing the regular session down less than 1 percent, as
Wall Street's initial alarm over mobile revenue results and spending
Facebook said on Wednesday that fourth-quarter mobile
advertising revenue doubled from the third quarter, but the results
failed to live up to some investors' high expectations. Chief Executive
Mark Zuckerberg's comments about boosting spending in the coming year
signaled that profit margins will be under pressure, adding to concerns.
initial fast money said earnings are going down, numbers are coming
down, the stock is going to get hit," said Macquarie Research analyst
"But the more people thought about it throughout
the day, the momentum changed and longer-term investors won out, saying
these are investments we think they should be making," he said.
has long established itself as one of the most popular websites with
more than a billion users, but investors have worried that until the
company's mobile advertising strategy takes off, revenue growth will
Three brokerages downgraded the stock, but most
analysts said investor expectations were too high and Facebook's mobile
advertising business was a good long-term bet.
Group analyst Brian Wieser upgraded Facebook to a "buy" rating on
Thursday, calling Wall Street's reaction to the results "downright
The stock market incorrectly interpreted Facebook's
"mobile revenue figures as a negative when in fact they are part of a
story that we can see as qualitatively more favorable," Wieser said.
of the company finished regular trading on Thursday down 0.8 percent at
$30.98 on the Nasdaq. Earlier in the session, the stock fell as low as
$28.74. Facebook stock has lost more than a quarter of its value since
its botched debut in May.
The company reported a
better-than-expected fourth-quarter profit on Wednesday and said mobile
advertising revenue doubled to $306 million, suggesting it was making
inroads into handheld devices such as smartphones and tablets.
were looking for at least $350 million in mobile advertising revenue,
Piper Jaffray analyst Gene Munster said in a note to clients.
the trajectory of mobile growth may not be as steep as some investors
were hoping, the theme of mobile as the future of Facebook remains
intact," Munster said.
BMO Capital Markets analyst Daniel Salmon,
however, said Facebook's 2013 stock performance would not be dictated by
its ability to generate mobile ad dollars. He downgraded the stock on
Thursday to "market perform" from "outperform."
Salmon said new catalysts were necessary to drive Facebook's stock price up.
© Thomson Reuters 2013