Facebook Inc., (NASDAQ:FB) scope in mobile advertising

Denver, CO, 07/29/2013 (Avauncer.com) – Shares of Facebook Inc., (NASDAQ:FB) fell 1.02% to close at $34.01 in its last trading session. However, shares have managed to remain at the higher end of its 52-week price range of $17.55 to $34.88. Also, shares were heavily traded, with 136.03 million shares being traded, as against an average volume of 32.97 million shares.

Facebook has been trying hard to revive its old glory, by introducing goodies such as Graph Search to its social networking website. This has led to increased user engagement. The company also sees mobile advertising gas a major source of revenue. The company has also outperformed itself, gaining 30% on Thursday after releasing its quarter earnings report.

The company’s venture into mobile advertising has turned out to be a boon for it. A year ago, Facebook had no revenue contribution from mobile advertising, contributing a phenomenal 41% to its ad revenue, up from zero in the previous year. However, investors should be cautioned as they are more interested in a year over year figure, and the above figure seems phenomenal only when compared to a straight zero. It is to be seen if Facebook can sustain the same growth rate in the years to come, which is unlikely to happen.  However, if the company is able to sustain even a decent figure in this area, it is expected to flourish, especially in the current scenario where users have started to shift from PC to mobiles, which has led to the death of PC industry as a whole.

Analysts at JPMorgan too have confirmed of the increasing user engagement on their favorite social networking site. However, there has been trend in users to shift to Instagram and Whatsapp, which are seen as alternatives of Facebook. This has led to a minimal impact on the site’s popularity. However, since Instagram is owned by Facebook, the overall impact on the company has mitigated. However, the company is yet to commercialize the product.

However, with better than expected results, even the management has cautioned about the company going forward.