News Column

Facebook's Stock Rising, but Not Fast

Feb 11, 2013

By Matt Krantz


Investors who got into Facebook's shares when it was hitting rock bottom are pleased with the stock. But original initial public offering investors are still feeling the pain.

Despite the 63 percent rally from its low, Facebook stock remains far from its original $38 a share initial public offering set last year. The stock still needs to rally nearly 30% just to let the investors who bought the shares at the IPO break even.

There's been plenty of positive momentum for the stock lately. In its most recent quarterly earnings report, Facebook reported 18% higher net income of $426 million, or 3 cents a share. Adjusting for one-time charges, the company earned 17 cents a share.

Meanwhile, Facebook is apparently gaining traction with mobile users. As of December, the company was getting more active users accessing its site using mobile devices than over Web browsers.

Expectations remain somewhat muted. Low expectations can be good for the stock, since Facebook might have an easier time impressing investors. Analysts expect the company to post revenue of $1.4 billion in the current quarter, down from the $1.6 billion it reported in the fourth quarter, says S&P Capital IQ.

Google remains a challenge, as it may try to extend is near-monopoly in Web search.

But in a note to clients, Jordan Rohan of Stifel Nicolaus says the stock is attractive and may move higher as Facebook makes more money on mobile.

Still, most analysts aren't ready to call for $38 a share yet. They currently have a one-year target price of $33.50 on Facebook, on average, meaning it will need to top expectations by a wide margin to hit $38 a share anytime soon.

Source: Copyright USA TODAY 2013

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