Facebook's share price is soaring right now, putting the company on track for its best performance since it debuted on the stock market in May. The social network's sudden leap into the stratosphere is due to what many analysts are dubbing its "mobile mojo," after the company reported that 14 percent of its advertising revenue, about $150 million, came from mobile devices in the third quarter. Facebook has been criticized for failing to adapt to the era of smartphones, which are increasingly becoming the dominant platform for internet usage, and the latest news is the first solid evidence that the company can make money off iPhones and other handhelds. Indeed, investors are so pleased that they are buying up Facebook stock despite the fact that the company posted an overall loss for the third quarter.
So has Facebook finally figured out the smartphone? It appears so, says Rolfe Winkler at The Wall Street Journal:
For Facebook, mobile suddenly looks like less of a challenge and more of an opportunity…
The primary product responsible for this growth allows advertisers to put ads directly in users' news feeds. That is where users' eyeballs are focused since it is where they see streaming updates from friends. Facebook claims, plausibly, that users are 10 times more likely to remember the ads they see in their news feeds than other ads running on the right side of Facebook's desktop pages.
Still, Facebook has to be careful. One danger is that too many smartphone ads could turn off users, says Barbara Ortutay of The Associated Press:
Facebook's challenges include ensuring that users are not overwhelmed by mobile ads bombarding their smaller phone and tablet screens. Chief Operating Officer Sheryl Sandberg said the company monitors user engagement to make sure this doesn't happen.
It's worth noting that Facebook's mobile strategy is still in its infancy. And the company is still under pressure to extract more revenue per user, which could tempt it to pump up its ads. However, at the moment Facebook has earned itself some valuable breathing room. "Investors are sated and confident," says Dave Thier at Forbes, "and the general narrative of 'Facebook's floundering stock price' has been reversed for the time being."