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Facebook Nears IPO Price as Stock Jumps Again

  +Follow July 30, 2013 4:50PM
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Facebook Inc (FB) is fast approaching $38 dollars a share, which is the price Facebook had their IPO at in May 2012. While Facebook is a difficult stock to value, mobile has long been seen as the key to realizing the potential of its 1.1 billion users.

 In April 2013, the social media company announced that they had redesigned their mobile experience to realize the full potential of mobile advertising. The news hinted that Facebook’s stock might be primed for a turnaround. But few predicted to what a degree the stock would rebound.

Since its triumphant second quarter 2013 earnings report on July 25, Facebook stock has skyrocketed 43.11 percent. The news that got investors giddy was that mobile advertising was now 41 percent of the company’s total ad revenue, and that number was expected to continue climbing in Q3. In the previous year’s second quarter, mobile accounted for zero of FB’s revenue.

As investors reap healthy profits on Facebook’s rise (or, for investors who got in at the IPO, at least recoup), analysts are beginning to question whether the stock’s rapid recovery has been too much, too soon. On July 26,  S&P Capital IQ analyst downgraded Facebook from buy to hold, arguing their P/E ratio can’t sustain such a meteoric rise. The company currently trades at 154 times earnings. That’s higher than all but five companies in the S&P 500. To compare, when Facebook had their IPO, their P/E ratio was 85.

But some analysts, despite the jump, remain bullish on Facebook. Brian Wieser of Pivotal Research Group LLC maintains a buy rating on the stock, and says that “at the time of the IPO the market didn’t really understand Facebook’s business. Renowned analyst Michael Pachter of Wedbush Securities backs this notion, claiming that the entire mobile experience encourages users to “check in day in and day out.”

Facebook’s stock was up 6.20 percent to close the day at $37.63 share, just 37 cents short of their IPO, amid exceedingly heavy volume.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Trevor G
25 Oct 14 10:04:34
Best play this week is $FB calls into earnings and buy puts/sell call spreads when it pops after beat.
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25 Oct 14 10:03:19
$FB the professionals bullish and bearish option trades into earnings http://t.co/2ob2UtfzAU
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25 Oct 14 10:02:31
http://t.co/uJUSGVHeKk officially launched at 1pm EST Sunday October 25th 2014. I guess it doesn't go for my Twitter lot, but see $FB later.
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25 Oct 14 09:58:42
$FB Leads Week's 5 Top IBD 50 Earnings Reports http://t.co/lbDtfQZS9R
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25 Oct 14 09:53:52
Facebook $FB @ all time high $80.67. Flashback to March at $58 https://t.co/JUPtwCricD
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25 Oct 14 09:45:06
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25 Oct 14 09:42:45
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25 Oct 14 09:41:31
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25 Oct 14 09:10:18
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25 Oct 14 09:05:09
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25 Oct 14 08:19:03
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  +Follow July 30, 2013 4:50PM
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