After an ugly 15 months of trading, the Facebook stock price (Nasdaq: FB) has not only passed its $38 initial public offering (IPO) price, but it has more than doubled over the last two months and is up an astounding 85% year to date.
Shares of the social networking giant have done a stark about-face since hitting a low of $17.55 in September 2012.
Some 135,723,000 shares changed hands Tuesday, making FB the day's most actively traded stock. Shares finished the day at $48.45, up 2.67%
Facebook stock was trading above $49 a share Wednesday.
Why is Facebook stock up after months of lingering nearly 50% below its IPO price?
Turns out Facebook found the key to unlocking advertising profits…
Citigroup (NYSE: C) analyst Mark May wrote this week that he had checked with advertisers and found that positive advertising trends that developed for Facebook in Q2 were still strong in Q3.
May wrote that several advertisers "are experiencing >15% seq. growth in spend," that recent data suggested growth in mobile app downloads, and that Facebook "had significant room to increase fill rates coming out of 2Q13."
He also upped his price target to $55 from $32, and upped his rating to "Buy" from "Neutral."
We asked our in-house advertising expert, Money Morning E-commerce Director Bret Holmes, if he saw the same growth trends in Facebook's ad presence.
"Advertisers are lined up around the block to get their hands on Facebook," Holmes told us Wednesday. "It is yielding huge returns for all of us in the industry."
Here's what Facebook is finally doing right…
How an Ad Overhaul Triggered a Facebook Stock Surge
Holmes said the rush to advertise with Facebook is due to a new format rolled out about eight months ago.
"Facebook has integrated in-stream ads to the user experience. Response rates are high and advertisers will always chase the least expensive ad with the best response. It works because it's new and cheap," said Holmes.
"Facebook now has the most advantageously competitive product on the market for advertisers – hands down."