Facebook stock avoids steep drop as Street rethinks results

Thu Jan 31, 2013 5:40pm EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

(Reuters) - 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 plans subsided.

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.

"The initial fast money said earnings are going down, numbers are coming down, the stock is going to get hit," said Macquarie Research analyst Ben Schachter.

"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.

Facebook 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 remain shaky.

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.

Pivotal Research Group analyst Brian Wieser upgraded Facebook to a "buy" rating on Thursday, calling Wall Street's reaction to the results "downright dazed."

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.

Shares 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.   Continued...

 
The Facebook logo is pictured at the Facebook headquarters in Menlo Park, California January 29, 2013. REUTERS/Robert Galbraith