When Facebook went public just over a year ago, not everyone thought it was worth the 40 bucks that investors paid. Today, that picture has changed.
Paul Sweeney, an analyst at Bloomberg Industries, said the concern back then was that Facebook basically made no money on mobile advertising.
"It was very unsure as to whether Facebook would be a viable player in the mobile arena, and that was one of the reasons the stock had a very bad IPO," Sweeney said.
But yesterday the company said it booked about $2.6 billion in revenues, a little more than half of which came from mobile advertising. Facebook now owns 16 percent of the mobile ad market. That's still way behind Google, which owns 53 percent, but it’s quite a turnaround.
Debra Aho Williamson, an analyst at e-marketer, says a revisioning of Facebook’s mobile app sparked that change.
“To its credit, once it realized that mobile was going to be so important to its future, [Facebook] did work fast, and it did develop an app that ended up working really well,” said Williamson.
Best of all, people actually started to use the app.
Then there was the CEO's change of heart. Williamson said Mark Zuckerberg was initially resistant to advertising, wanting to keep the site as "clean" as possible. But since the IPO, shareholder interests have trumped startup sensibilities, and the company has pursued ad dollars aggressively.
Facebook now has more than a billion users. But some investors worry the company is losing the key teen demographic. Brian Wieser, an analyst at Pivotal Research Group, isn’t worried. He said Facebook is now more than just a hangout.
“Facebook has been a utility for consumers and for advertiser alike for a very long time,” said Wieser. He means it’s like email or the telephone -- it’s where we keep our contacts, and communicate with each other.
Morever, he adds, Facebook owns Instagram, which teens love. For now!