Facebook revenues soar 61 per cent, stock hits record high

Social network’s quarterly earnings top $2.9 billion, crushing estimates

Facebook founder and chief executiveMark Zuckerberg. The social network’s quarterly earnings topped $2.9 billion, crushing estimates. Photo: Reuters

Facebook founder and chief executiveMark Zuckerberg. The social network’s quarterly earnings topped $2.9 billion, crushing estimates. Photo: Reuters

Thu, Jul 24, 2014, 08:22

Mark Zuckerberg is staring down naysayers who hammered Facebook’s stock after its debut two years ago.

Facebook shares are poised to reach a new high today after the social network topped its record close from March of $72.03 in extended trading.

Facebook posted second-quarter sales that surged 61 per cent to $2.91 billion, exceeding analysts’ average estimate of $2.81 billion. Mobile promotions accounted for 62 per cent of ad sales, up from 59 per cent in the prior period.

Net income more than doubled to $791 million, with profit excluding some items at 42 cents a share, above the projection of 32 cents. The results drove Facebook shares to as high as $75.45 in extended trading, after rising 2.9 per cent to $71.29 at yesterday’s close in New York.

The gains underscore how far Zuckerberg has brought the social network since its 2012 initial public offering, when its stock plunged on investor concern over the lack of mobile revenue.

Now that the chief executive officer has made ads on smartphones and tablets Facebook’s core business, he’s building on that foundation with a mobile network to spread the company’s ads across the Web and wireless devices, as well as with video promotions and by boosting the effectiveness of ads.

“You pay up for growth as long as it doesn’t become excessively overvalued, and I don’t think this is,” said Martin Pyykkonen, an analyst at Rosenblatt Securities.

In total, Facebook accounted for 5.8 per cent of worldwide digital ad revenue in 2013, up from 4.1 per cent in 2012, according to EMarketer.

Digital ad spending worldwide rose 14.8 per cent to $120 billion last year and is projected to reach $140 billion this year.

Bloomberg