This content is not available in your region

Facebook shares jump on soaring profits driven by mobile ads

Facebook shares jump on soaring profits driven by mobile ads
Text size Aa Aa

Facebook’s big profits from its fast-growing mobile advertising are behind a surge in the share price to record highs.

The social media site’s revenue increased by 61 percent during the second quarter while net income jumped by 138 percent from the same period last year.

Mobile advertising revenue grew 151 percent year-over-year, accounting for roughly 62 percent of Facebook’s overall ad revenue.

Stock picker Scott Kessler with S&P Capital is impressed by Facebook: “It really is so unique. And the reality is they are doing a very, very good job of delivering each and every quarter. It’s clear that they have a focus, and they are executing against it.”

Facebook said it is seeing increased interest in mobile ads from users and advertisers – who now number 1.5 million world wide.

It also revealed it currently has 1.32 billion monthly users, with around 63 percent of them logging on every day.

Aggressive investment

Facebook executives stressed on a conference call that the company planned to invest aggressively in new projects, such as the Oculus virtual reality headset business that Facebook recently acquired for $2 billion.

And they reiterated past comments that nascent advertising efforts in video and in the Instagram photo-sharing app would not contribute significantly to the top line in the near term.

Nor will Facebook take the “cheap and easy” route of putting ads or payment capabilities within its Messenger app, Facebook Chief Executive Mark Zuckerberg said on a conference call with analysts on Wednesday.

JMP Securities analyst Ronald Josey said that the go-slow approach was not a concern for investors: “There’s really no rush to add them because their core business is doing so well.”

with Reuters