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Facebook profit rises 71%, mobile ad sales grow 50% in June quarter

LiveMint logoLiveMint 27-07-2017 Sweta Singh

Shares of Facebook Inc. touched a record high on Thursday on the back of overwhelmingly positive quarterly results, adding more than $27 billion to its market value.

The world’s biggest online social network posted a 71% surge in June quarter profit and a 50% jump in mobile ad sales, allaying investor concerns that ad revenue growth was peaking as it runs out of space to display ads.

Shares rose 6% to $175 in early trading, adding gains worth twice the market capitalization of rival Twitter Inc.

Facebook’s stock had slipped as much as 2% on 4 May, a day after it posted first-quarter results and said ad revenue growth was expected to come down significantly over the rest of 2017.

Ad sales growth did slow to 47% in the June quarter, after a 51% increase in the March quarter, but investors brushed it aside, looking ahead to new growth drivers—WhatsApp, Messenger and video.

At least 11 brokerages raised their price targets. Wedbush was the most bullish, lifting its target by $40 to $225. The median price target is $190.

“The strength of Facebook’s mind-boggling results continued to be a testament to the platform’s massive user base and unparalleled targeting abilities,” MoffettNathanson Research analyst Michael Nathanson said.

Mobile ads accounted for 87% of the $9.16 billion in total ad revenue even as the average growth in ad price jumped 24% to a record high.

Chief executive Mark Zuckerberg said he expected video to become the “primary driver” of revenue over the next few years. Lack of details, however, left analysts cautious about the firm’s video efforts.

“The biggest open-ended questions will be how successfully Facebook can monetize its video-only tab and TV extension product,” Nathanson said. Reuters

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