Does Facebook have a Rosier Future in the Stock Market

The hype surrounding Facebook’s eventual initial public offering (IPO) started about two years before it ever happened. The social network giant finally went public in May 2012 with many media reports projecting it as the biggest IPO ever.

However, the reality was that the IPO was a flop. Its initial price was $38, but the price of shares quickly dropped in the following weeks and months. Facebook’s IPO proved to be a disappointment as the stock continued to perform dismally for the next year, often languishing in the $20 range.

Although, fast-forward to July 2013, and it appears there is a glimmer of hope surrounding Facebook when it comes to its stock.

The company released its second-quarter earnings and sales expectations, which had exceeded projections, and this caused its shares to jump up a whopping 17 percent on the stock market, according to the Street Journal.

Much of this boost is attributed to mobile applications and Facebook finally making inroads in this market, which had been previously elusive.

“We’ve made good progress growing our community, deepening engagement and delivering strong financial results, especially on mobile,” said Mark Zuckerberg, Facebook founder and CEO, in the company’s financial status. “The work we’ve done to make mobile the best Facebook experience is showing good results and provides us with a solid foundation for the future.”

Results showed daily use by Facebook members increased 27 percent since the second quarter of 2012, and monthly active users also increased 21 percent. The biggest increase in users, however, was in mobile, which jumped up 51 percent since last year. Revenue over the same time period last year was up 53 percent, with a substantial rise in advertising, much of it in the coveted area of mobile.

The company pointed out other successes and it seems investors liked what they were hearing. At 4 p.m. market close on Friday, July 26, shares were worth $34.01. Despite this boost on the stock market, Facebook’s value is still well below its IPO, but if last week’s market activity is any indicator, the network may have a rosier future.

Even analysts that previously held low expectations for Facebook’s stock over the long term are revising their opinions and estimates, as noted by the York Times.

Although, there is caution, as Wired points out, musing hidden risks associated with Facebook.    

Facebook currently has about 1.2 billion users worldwide. Facebook points to the continued interest in the social network with no signs of boredom yet.

But will there come a time when people fatigue of Facebook and want to move to something new?

Time will tell.