Facebook stock up following positive third quarter earnings

Alex Masters

facebook crowd 300x225 Facebook stock up following positive third quarter earningsThings are looking up for Facebook after a small but significant improvement in its previous quarter earnings pushed up its stock price up by 19 per cent by the close of business yesterday and up an additional 1.5 per cent in after-hours trading at the time of writing.

Facebook’s revenue increased to $1.23 billion in the company’s third quarter since going public back in May earlier this year. Up slightly from $1.18 billion in the previous quarter, despite news that social gaming company Zynga had laid off five per cent of its workforce during Apple’s October keynote.

Zynga, one of Facebook’s most important advertising partners, is experiencing a continued decline in revenue from its catalogue of social games. Facebook reported that revenue from Zynga was down 20 per cent this quarter alone. The lay-offs and cancellation of 13 older games are a direct result of this decline in revenue. Zynga are scrambling to reduce running costs and regain financial stability, as investments in games such as Words with Friends and The Ville have not performed as well as the company had initially hoped.

Despite Zynga’s struggles, Facebook’s revenue from the wider social gaming ecosystem has increased by an impressive 40 per cent. This is good news for investors who have been concerned that Facebook are relying too much on Zynga as an important source of revenue moving forwards.

Mobile advertising accounted for 14 per cent of Facebook’s overall revenue this quarter. A positive sign that the social network has the ability to successfully monetise mobile, as its users continue to shift from the desktop to smartphones and tablets to access the social network.

Facebook’s CEO Mark Zuckerberg believes the shift to mobile will lead to more Facebook users, resulting in more frequent use of the social network, increasing the overall time each user spends on Facebook. “The business question becomes, how much money we can make from that time?” Mark commented during Tuesday’s earnings call.

At the moment Facebook have only just begun to scratch the surface when it comes to mobile advertising. ‘App Install’ adverts and the occasional sponsored ad show up every once in a while, but nothing overwhelming so far. Expect this to change over the coming months as Facebook gradually ramp up mobile monetisation, slowly but steadily.

Whatever happens we’ll have to eventually accept them in some form or other.

Are you finding adverts on the mobile app to be intrusive or distracting enough to change your usage habits, or are you quite happy to welcome them into your mobile news feed?

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  • Pascale1

    I asked my daughter if she ever clicked on a facebook advert, she replied “what adverts”

    Smoke and mirrors, south sea bubble come to mind, good for zuckerberg, not for investors !

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