Facebook’s Value Tops $200 Billion on Mobile-Ad Optimism

By Crayton Harrison and Sarah Frier

Facebook Inc. (FB)’s market value exceeded $200 billion to put it among the world’s biggest corporations, as investors bet on the company to capitalize on the future of mobile advertising.
Facebook shares rose 0.8 percent to $77.89 at the close in New York, valuing the company at $201.6 billion, according to data compiled by Bloomberg. That made it the 22nd-largest company in the world, behind Verizon Communications Inc. and ahead of Toyota Motor Corp.
The stock has jumped 9.3 percent since July 23, compared with a 0.7 percent increase in the Standard & Poor’s 500 Index, after Facebook reported a 61
percent increase in second-quarter sales to $2.91 billion. Mobile promotions accounted for 62 percent of ad sales, up from 59 percent in the prior period.

Infographic: Facebook Valuation Tops $200 Billion

The gains are a far cry from Facebook’s May 2012 initial public offering, when a lack of mobile revenue led to a plunge in its stock. Chief Executive Officer Mark Zuckerberg, the world’s 13th-richest person according to the Bloomberg Billionaires Index, has made ads on smartphones and tablets Facebook’s core business and is building on that foundation with a mobile network to spread the company’s ads across the Web and wireless devices.

Photographer: Simon Dawson/Bloomberg

Chief Executive Officer Mark Zuckerberg, the world’s 13th-richest person according to... Read More

Facebook shares had already jumped 81 percent in the 12 months through Sept. 5, compared with a 21 percent increase for the S&P 500. The social network’s market capitalization exceeds technology stalwarts like International Business Machines Corp. and Oracle Corp., though its sales, estimated at $12.2 billion this year, are a fraction of those at the more established companies. Investors are betting on growth, with 43 of 53 analysts recommending buying the stock, according to data compiled by Bloomberg.

Better Promotions

Facebook’s performance last quarter was spurred by brands and marketers paying higher prices for better-quality promotions, Chief Financial Officer David Wehner said in July. The average ad price more than doubled from a year ago, even as ad impressions declined 25 percent over the same period.
Facebook accounted for 5.8 percent of worldwide digital ad revenue in 2013, up from 4.1 percent in 2012, according to EMarketer Inc. Digital ad spending worldwide rose 14.8 percent to $120 billion last year and is projected to reach $140 billion this year.
To capitalize on these trends, Facebook has been building its arsenal of advertising services. Apart from rolling out a video-ad product to compete for television budgets and a network for distributing ads on other developers’ apps, Facebook agreed this year to acquire LiveRail, a startup that would help serve video promotions on the Web beyond the social network.

Privacy Critics

Last month, Facebook introduced a tool that lets advertisers know when a promotion was first viewed and when it led to a purchase by tracking users between their electronic devices. Such services have drawn criticism from privacy advocates, representing a potential roadblock to the company’s growth.
Zuckerberg has also been making multibillion-dollar acquisitions to diversify the company. Facebook in February said it would pay about $19 billion for messaging app WhatsApp Inc. In July, the company completed the purchase of Oculus VR Inc. for about $2 billion. Oculus makes a virtual-reality headset that Zuckerberg has said will be a major communication device after mobile phones.