Facebook Tops $38 IPO Price for First Time Since May 2012

July 31 (Bloomberg) -- Bloomberg News' Edmund Lee examines Facebook's growth in mobile advertising as the social network is said to begin offering 15-second video advertising later this year and Nielsen data that rates Facebook's prime-time audience as larger than that of network television. He speaks on Bloomberg Television's "In The Loop."

Facebook Inc. (FB) rose above its $38 initial public offering price for the first time since its debut trading day, capping a 14-month comeback fueled by innovations in mobile advertising.

Facebook climbed as high as $38.31, an intraday price not seen since the May 18, 2012 IPO. The shares retreated 2.2 percent to $36.80 at the close in New York, leaving them up 38 percent this year. Facebook had tumbled to a low of $17.55 in September.

The stock is still trading near record levels. Chief Executive Officer Mark Zuckerberg is benefiting from surging demand for ads targeting smartphone and tablet users. Facebook last week said ads on wireless devices generated 41 percent of revenue in the second quarter, up from 14 percent a year earlier, easing concerns about the company’s ability to profit from mobile users that weighed on the shares after the IPO.

“It’s been a fantastic run,” Ron Josey, an analyst at JMP Securities Inc. in New York, said in an interview. “There may be a psychological barrier there with the IPO price, but that’s not something that’s fundamentally wrong.”

By letting marketers show messages in the news feed on wireless devices, and shifting development efforts toward applications, Zuckerberg is delivering on his promise of making Facebook a “mobile-first” company, according to Jordan Rohan, an analyst at Stifel Nicolaus & Co. in New York.

Photographer: David Paul Morris/Bloomberg

Facebook Inc. Chief Executive Officer Mark Zuckerberg is benefiting from surging demand for mobile ads as more users access Facebook on smartphones and tablets. Close

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Photographer: David Paul Morris/Bloomberg

Facebook Inc. Chief Executive Officer Mark Zuckerberg is benefiting from surging demand for mobile ads as more users access Facebook on smartphones and tablets.

Mobile Expansion

The number of smartphone and tablet users expanded to 819 million during the second quarter, Facebook said last week. Revenue rose 53 percent to $1.81 billion, topping analysts’ average projection for sales of $1.62 billion, according to data compiled by Bloomberg. Those results propelled Facebook’s shares to a record 30 percent gain on July 25.

“If you owned the stock last week and you made $10 a share, you’re probably selling and taking the profit today,” Michael Pachter, an analyst at Wedbush Securities Inc., said in an interview. “I think people were holding out for that magic $38.”

To create another new source of advertising revenue, Facebook plans to sell TV-style commercials on its site for as much as $2.5 million a day, two people familiar with the matter said this week.

The world’s largest social-networking site, which has 1.15 billion members, expects to start offering 15-second spots to advertisers later this year, those people said.

To contact the reporter on this story: Callie Bost in New York at cbost2@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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