Earnings Propel Facebook (FB) Shares to Three-Month High

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The social network is partying like it’s April.

Facebook (NASDAQ: FB) shares are up an eye-popping 23% in early trading today after the company’s third-quarter earnings impressed investors. The company actually lost money for a second straight quarter, but demonstrated enough growth in its nascent mobile advertising business to convince investors that it’s trending back toward profitability.

Here are some of the details that investors seemed to like from yesterday’s Facebook earnings report:

  • Revenue increased 32% to $1.26 billion for the quarter – slightly ahead of Wall Street estimates.
  • Mobile ads generated 14% of the company’s Q3 revenue – a huge number for a part of the business that didn’t exist until March.
  • The company earned $1.7 million a day from mobile advertising in the third quarter – more than three times the $500,000/day average in the second quarter.
  • The $153 million in mobile sales was triple what analysts were expecting.
  • The number of mobile users increased 61% to 604 million.

So Facebook’s mobile business is expanding, opening up a whole new avenue of potential growth. That’s why Facebook shares jumped above $24 for the first time since late July, even when profits were down 2% year-over-year.

The stock is still down 37% from its $38 IPO price. And some potential near-term headwinds loom – over 1 billion will be free from their lock-up agreements between now and November 14. That means that employees who bought shares at the time of IPO will be free to sell off those shares for the first time since the stock went public on May 18.

However, with such encouraging growth in Facebook’s mobile ads business, perhaps shareholders will be less inclined to sell their shares. 

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