By Reuters
Filed under: Technology, Facebook, IPOs, Stock Quotes
By Alexei Oreskovic
Facebook’s (FB) stock on Tuesday came within a hair of reclaiming its $38 debut price for the first time since going public in 2012, a milestone in the social networking company’s effort to wipe away Wall Street’s skepticism of its business.
The stock has surged more than 40 percent in the past week after the company reported blowout quarterly results that showed Facebook’s progress building a mobile advertising business. Shares of Facebook climbed as much as 7 percent to $37.96 in heavy trading on Tuesday, before settling back to finish the regular session at $37.63.
The social network, with 1.15 billion users, has never traded at or above $38 since the first few days after its initial public offering in May 2012.
Facebook’s market value was cut in half in the months following the IPO as concerns about issues ranging from slowing revenue to massive insider selling made the Internet company’s stock a Wall Street punch line.
“Most companies of that size don’t re-accelerate their growth rate. Facebook’s been an exception,” said Aaron Kessler, an analyst with Raymond James. “I would say they’re in better shape today than they were at the IPO price and the stock is still below that.”
Facebook options volume was frenzied on Tuesday, as overall turnover was 3.8 times the recent daily average, according to options analytics firm Trade Alert. Traders on Tuesday exchanged 694,000 calls and 300,000 puts on Facebook.
The most popular options were the weekly $38 and $37 strike calls expiring this Friday as most traders expected gains in coming days. One player liked the weekly $32.50 strike puts expiring on Aug. 9, which appeared to be bought 15,000 times for only a dime, said options strategist Frederic Ruffy.
Facebook’s recent success building a mobile advertising business — an area where many of its rivals have struggled — and the online service’s expanding number of daily users have won back investors’ respect and confidence in its prospects. That has fueled a rebound in the shares, which are up more than 50 percent in July.
Facebook said last week its mobile advertising revenue grew 75 percent in a span of three months, trouncing analyst targets and delivering the company’s strongest revenue growth since the third quarter of 2011. Many analysts raised their price targets above the $38 level following Facebook’s quarterly report last week.
The second quarter results “were really a game-changer in terms of how Facebook is perceived on the Street,” said Pacific Crest Securities analyst Evan Wilson. “It was pretty close to the perfect quarter.”
Facebook announced plans on Tuesday to help market and distribute mobile games on its social network in exchange for a cut of revenue that the games generate, raising hopes that the company could tap a new business. And many investors expect Facebook …read more
Source: FULL ARTICLE at DailyFinance
