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Facebook Soars 8% - Turning the Page On Growth

This article is more than 10 years old.

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Investors of social media giant Facebook are rejoicing an 8% surge in the stock. After closing the shortened trading session on Friday at $24, Facebook shares reached as high as $26 in early afternoon trading on almost 60% more volume than usual.

What prompted the rash of buying was in part due to an upgrade from Bernstein analyst Carlos Kirjner from Market Perform to Outperform while also issuing a $33 price target. Kirjner was not alone in his bullish sentiment. Victor Anthony of Topeka Capital also reiterated his buy rating while raising his price target to $36.

What Has Changed?

With now two full quarters under its belt as a public issue, Facebook and its leaders understand what the company must do to regain investor trust and truly answer the question that has most investors puzzled – “what is the value of social media?” In the meantime, investors as well as analysts continue to believe in Facebook’s new direction, which many call “turning the page.”

The company’s mission is now clear – it wants to make money and return value to shareholders. This was evident in its most recent quarter as ad revenue soared YOY by 43% and equally impressive was that it represented a 33% increase from the previous quarter. That Facebook was able to accomplish this in one of the most difficult periods for most tech companies speaks to the level of execution of which the company is capable. Investors should find this particularly encouraging – at least it’s been enough to warrant the bullish calls as noted above.

Bottom Line

It seems the market has completely digested much of the bad news that has followed Facebook since its botched IPO in May. Now, investors appear ready for the next chapter and likewise have established a more realistic view of the company and its potential – one that is void of all of the hype. Although the company is not completely out of the woods just yet, Facebook today is a much different story than the one that arrived on the scene and was given Apple and Google-level respect. This time, the sequel just might be better.