Facebook Inc., operator of the world’s most popular social-networking service, climbed to a record after an analyst at Citigroup Inc. upgraded the stock to a buy, saying growth is “sustainable.”
Shares advanced 2.7 percent to $48.45 at 4 p.m. in New York, a new closing high. The stock, which lost half its value in the four months following the company’s May 2012 initial public offering, has gained 82 percent so far this year.
Facebook’s earnings report in July marked a turning point, assuaging investor concerns about the company’s ability to make money as users shift their activity to wireless devices. Chief Executive Officer Mark Zuckerberg has boosted efforts to attract consumers and advertising dollars to Facebook’s services on smartphones and tablets, where promotions are interspersed with updates and photos. Mobile made up 41 percent of advertising revenue in the second quarter, up from 30 percent in the previous period.
“Following several conversations with advertisers and agencies we believe the factors driving the sudden inflection and growth in the second quarter are sustainable and that there are a number of factors that should contribute to further growth and gains, and potential upside,” Mark May, an analyst at Citi Research, wrote in a report. He also raised the target price to $55 from $32.
The Menlo Park, California-based company has spent more than a year rolling out advertising products aimed at reaching consumers on mobile devices. Facebook, which has more than 1 billion members, has also worked to simplify the ad-buying process.
Facebook, which has a market capitalization of almost $118 billion, has surged more than 80 percent since reporting in July that sales of promotions on wireless devices are on track to surpass revenue from desktop computers.
Separately, China is set to lift the ban on Internet access to foreign websites considered politically sensitive to the government within the Shanghai Free-Trade Zone, including Facebook, the South China Morning Post reported on its website, citing government officials who spoke on condition of anonymity.
Debbie Frost, a spokeswoman for Facebook, declined to comment on the report.