NEW YORK — Concerns about Facebook’s ability to keep young teens coming back every day spooked some investors, even though the company’s latest quarterly results showed continued strength in mobile advertising and beat Wall Street’s expectations on all counts.
Shares of the world’s largest social network spiked then turned lower in after-hours trading Wednesday evening after its third-quarter results came out. By midday Thursday, though, Facebook’s stock was trading about 5 percent higher as investors digested the news.
At issue was a remark by Facebook Inc. finance chief David Ebersman, who said the company saw a decrease in daily use among younger teenagers, an important but fickle demographic.
In addition, the company said that it doesn’t expect to significantly increase the number of ads it shows in users’ feeds, a decision that could slow down Facebook’s advertising revenue growth.
After soaring as much as 18 percent to $57.98 after the quarterly results came out, shares of Menlo Park, Calif.-based Facebook slid to $48.44 in extended trading during the company’s conference call Wednesday night. On Thursday, the stock fluctuated between $41.50 and $51.40 and was up 3 percent at $50.48 in midday trading.
The stock’s fluctuations overshadowed a stellar quarter. The world’s largest social network said Wednesday that it earned $425 million, or 17 cents per share, in the third quarter. That’s up from a loss of $59 million, or 2 cents per share, in the same period a year ago.
Adjusted earnings were $621 million, or 25 cents per share, in the latest quarter. That’s 6 cents better than analysts expected. This figure excludes special items, mainly stock compensation expenses.
Revenue grew 60 percent to $2.02 billion from $1.26 billion, helped by increasing mobile advertising revenue.
Analysts, on average, were expecting revenue of $1.91 billion, according to FactSet.
“The strong results we achieved this quarter show that we’re prepared for the next phase of our company, as we work to bring the next five billion people online and into the knowledge economy,” CEO Mark Zuckerberg said in a statement.
Facebook’s advertising revenue was $1.8 billion, up 66 percent from a year ago. Mobile ads accounted for 49 percent of the company’s total ad revenue during the quarter. In the second quarter, mobile ads amounted to 41 percent of the total. The increase shows Facebook’s strategy to become a “mobile-first” company is paying off.
At the same time, Facebook is growing its share of the mobile advertising market. Research firm eMarketer estimates that Facebook will grab 15.8 percent of the world’s mobile ad spending this year, up from 5.4 percent last year. Google Inc., meanwhile, is expected to capture 53.2 percent this year, up slightly from a 52.4 percent share in 2012.