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The Ad Blitz is Paying Off: Facebook’s Stock Soars Pass $30

Sites include , . Published on January 11th, 2013. Written by Anthony West.

For the first time in 6 months Facebook’s stock price is at the heady level of $30 a share. CNBC stock ticker is reporting a 4% gain today on a stock that has taken a veritable battering since coming to the market. The market exuberance seems genuinely tied to the last few month’s performance of Facebook as a company, although some are speculating that an upcoming press conference might be fueling the bullishness.

The ad blitz

When Facebook launched its IPO back in May 2012 the glaring holes in the company’s business model became very apparent, and investors quickly showed what they thought about those holes. The stock plummeted and CEO Mark Zuckerberg barely survived calls for his head.

Facebook had no choice but to ramp up monetization of the platform’s 1 billion+ users and round about October the clear change in advertising strategy became apparent. Users have since been bombarded with no fewer than 5 new ad channels ranging from Promoted Posts, to Gifts. Few would disagree with the fact that Facebook has been aggressively using its users as advertising fodder. The surprising thing though is that users don’t seem to mind, and this has been reflected largely in the engagement levels which remain steady for almost 12 months.

Analysts loving Facebook again

The same analysts who were calling for Zuckerberg’s head and decrying the business model are now all of a sudden bullish on Facebook. Merrill Lynch’s recent appraisal of the platform’s long term prospects has helped to reignite investor interest in the stock and Facebook is now back in the $60 billion market cap range.

Of course $30 is a not quite where Facebook debut (that was $38.23) but given the September 4, 2012 low of $17.73, it’s a solid start to the New Year and a good sign that things are starting to roll again at Facebook. The platform will no doubt continue to grow and as more and more people from developing markets join Facebook, Zuckerberg and co will be able to make money off them. Granted it won’t be the sort of revenues enjoyed via North American and European users but it will be enough to at least show that the business model works.

2013 and the competition

Facebook is the number one social network in 127 of 137 countries assessed recently and it is reasonable to expect that to remain the same for at least another couple of years. But competitors are lurking, especially Google+ which recently breached the 500 million active users mark. As Google+ and other define themselves in the minds of users and especially given the proliferation of ads on Facebook, users may start bolstering these alternative platforms in more real ways. It’s perhaps hard to imagine now but in a few years’ time platform’s like Google+ will almost certainly have a higher level of engagement than Facebook.

Facebook’s aim therefore will be to maintain engagement, earn money through selling ads without alienating or poisoning the overall Facebook experience. So far the moves made whilst aggressive have managed to achieve both those aims, let’s just hope that Zuckerberg and his team can keep going in the same vein.

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