Facebook beats Wall Street targets, stock hits record high
By Alexei Oreskovic
SAN FRANCISCO (Reuters) - Facebook Inc's fast-growing mobile advertising business helped drive a 61 percent increase in revenue during the second quarter, beating Wall Street's financial targets and sending shares to a record-high in after-hours trading on Wednesday.
The world's No.1 Internet social network said on Wednesday that it saw increased interest from both advertisers and from users during the second quarter, while the company's profit margins expanded.
Facebook now counts 1.5 million advertising customers and the company's ad business saw strong growth across all of its geographic regions, Chief Operating Officer Sheryl Sandberg told Reuters in an interview on Wednesday.
"We’re seeing our existing advertisers spend more and we’re seeing new people come on to the platform," Sandberg said.
Investors bid up shares of Facebook roughly 5 percent to $75.13 in after-hours trading on Wednesday, giving the Internet company a roughly $190 billion valuation, putting it on par with IBM Corp.
"It might be more expensive from a market cap perspective, but I don’t think anyone was expecting this level of profitability," JMP Securities analyst Ronald Josey said.
Facebook's operating margin expanded to 48 percent of revenue in the second quarter, up from 31 percent in the year-ago period. Overall revenue of $2.91 billion beat the average expectation of $2.81 billion, according to analysts polled by Thomson Reuters I/B/E/S.
Facebook executives stressed on a conference call that the company planned to invest aggressively in new projects, such as the Oculus virtual reality headset business that Facebook recently acquired for $2 billion. Continued...