Leading up to Facebook’s (FB) IPO, everyone was looking for a way to get their hands on shares of (NASDAQ: FB). Unfortunately, the IPO failed to impress investors and ultimately there were too many shares offered, dragging down the price. In the ensuing months, Facebook continued to fall all the way into the teens. Only recently have investors warmed up to Facebook after a solid earnings report and ad growth numbers. Additionally, today is the first day that Facebook will begin trading in the Nasdaq Index. Shares closed down 41 cents or -1.5% at $27.57. As of this close, the stock is officially up 57% since its low of $17.73 but still 27% below its $38 IPO price.
Facebook continues to make a surprising turnaround with the company continuing to capitalize on mobile browsing. Additionally, analysts have gotten behind the stock with an average recommendation rating of 1.9. The company may have a high price to earnings at 254 but the forward price to earnings of 43 shows that the company is expected to grow earnings next year. Speaking of earnings, analysts predict to see growth of 27.5% next year and 27.14% the next five years. Facebook does give investors some relief, as they are very financially stable with a current ratio of 11.4 and virtually no debt.
Now that Facebook is listed on the Nasdaq, I think it will give investors even more confidence in the company, especially if they continue to show growth in mobile browsing. Furthermore, the site continues to improve privacy functions, which will help protect users further from information leaks. As I have stated previously, the growth in mobile browsing is huge. Everyone is on their smartphones these days and Facebook tends to be a destination at one point or another for many.
As Facebook continues to innovate the site and attract new users, ad growth could increase as well, which helps Facebook’s profits grow. Additionally, while CEO Mark Zuckerberg squashed rumors of Facebook developing its own phone, the company certainly has played a part with some major phone companies. The company has a short lived “button” on HTC devices but that did not really do much for the firm. However, France Telecom (NYSE: FTE) announced that they would allow android and iPhones be able to talk over Facebook’s messaging system instead of the writing messages. It is yet to be determined how big it will be but it is just another example of the company being aggressive and looking for new ways to innovate and stay on top.
The bottom line here is that Wall Street and the investment world is starting to rethink Facebook after a poor start. The growth is there and the innovation is a high priority. Overall, I think 2013 will be a successful year for the social networking firm as they try to get over their IPO price.
Disclosure: None