Just when it looked like Facebook (NASDAQ: FB) had turned the corner, a disappointing fourth-quarter earnings report knocked the social network’s stock back 6.5% entering Thursday trading.
While revenue was up 40% from a year ago, Facebook’s profits declined 79%, weighed down in part by heavy spending on new initiatives such as the “Graph Search” the company unveiled earlier this month. The 79% drop-off was roughly in line with analyst estimates – but didn’t look good nonetheless.
Facebook shares opened the day below $30 for the first time in nearly two weeks. The stock has actually fallen 10% since Monday.
That’s a distinct reversal from the previous three months. Since November 9, Facebook shares have climbed 52% even after their recent pullback. They touched a six-month high of $32.47 earlier this week.
Despite today’s dip, the earnings news wasn’t all bad. Advertising revenue grew faster than any other quarter, rising 41% from the same quarter a year ago.
What’s most encouraging is that mobile ads accounted for 23% of Facebook’s total ad revenue – up from just 14% in the previous quarter. Mark Zuckerberg has made no secret recently about his desire to improve the social network’s mobile presence. Now it appears the company is on the right track.
For those bullish on Facebook and eager to get in on the stock, today’s pullback may create a nice buying opportunity. The $29 the stock has fallen to this morning may be an ideal entry point.
As long as the company can curtail its future spending, Facebook’s mobile-advertising improvement could give it a whole new avenue for growth. Last night’s may end up being a slight speed bump in a longer-term Facebook rally.