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Facebook shares get lift from optimism over mobile ad sales

January 02, 2013|By Jessica Guynn
  • An iPhone displaying the Facebook app's splash screen in front of the login page.
An iPhone displaying the Facebook app's splash screen in front of… (Karen Bleier / AFP / Getty )

Mobile advertising may still be in its infancy, but analysts like what they are seeing from Facebook Inc. so far.

Facebook stock jumped $1.38, or 5.2%, to $28 on Wednesday after JPMorgan Chase & Co. increased its price target to $35, citing “strong advertising trends.”

Analysts predicted that advertising on mobile devices would surpass spending on the desktop in 2014. Some 600 million Facebook users connect with the social network from their mobile devices.

“We are incrementally positive on Facebook shares into 2013 as we believe it remains very early in the trajectory of Facebook’s mobile advertising,” analyst Doug Anmuth wrote in a research note. “Importantly, we believe marketers are also realizing that there is branding and awareness value in Facebook ads and that users don’t necessarily have to click through to drive returns.”

New advertising features that the company has rolled out, such as Facebook Exchange, have also boosted advertising on the desktop, Anmuth said.

JPMorgan predicted that Facebook had a 49% increase in advertising in the fourth quarter of 2012, after a 36% increase in the third quarter. It estimated that mobile made up 27% of advertising revenue in the quarter, up from 14% in the third quarter.

For 2013, JPMorgan is predicting $6.7 billion in sales. That’s a 7% increase from its earlier estimate. In 2014, Facebook could reach $8.2 billion in sales, up nearly 8% from an earlier estimate, the firm said.

Cowen & Co. analyst John Blackledge was less bullish. He started his coverage of Facebook with a neutral rating, saying his estimates for the company’s in 2014 and beyond are below Wall Street consensus.

“Our proprietary ad buyer survey data suggests a mixed view of the future spending trajectory,” he wrote.

He said a survey of 50 U.S. ad buyers that Cowen & Co. conducted suggested that Facebook’s share of “social advertising” would decline to 58% from 67% over the next 12 to 18 months with Twitter, LinkedIn and other social networks gaining share.


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