Today: Facebook makes a move that could signal a wider reach for its advertising network, capping off its second straight week of 10 percent gains for its stock. Also: Wall Street rebounds despite banks' credit downgrade, and Tesla hands out keys to first Model S sedans.
Facebook rides revenue focus to second consecutive week of 10 percent gain
Facebook completed its second consecutive week with gains of more than 10 percent on Wall Street, capped off with a strong gain on Friday that helped tech stocks lead a rebound from Thursday's large losses.
Facebook, which had its first positive week of trading last week with a 10.7 percent gain, increased another 10.1 percent this week, showing strength even during a massive sell-off in securities on Thursday. Friday's gain of 3.8 percent pushed Facebook shares to a closing price of $33.05, its highest closing price in a month, since the first full week of trading in the stock after its record-breaking initial public offering.
While the deal with Zynga is unlikely to bring Facebook immediate revenue returns, it signals a willingness to expand its advertising platform beyond its own popular website. While the world's most popular social network has 900 million members, by offering advertisers a solid platform Facebook could significantly increase its revenue by providing its ads to other websites, similar to Google's (GOOG) advertising network. A spokesman for the Menlo Park company told Inside Facebook, which originally reported the story, that "We will not be showing ads on other sites at this time," but that statement leaves open the possibility that Facebook could expand the program beyond its traditional partner Zynga.
Of course, Facebook cannot focus all its energy on proving the company's ability to increase revenue, or it runs the risk of alienating the massive cache of users that made it valuable in the first place. On Friday, the company announced a step for which users have long clamored, the ability to edit comments after they are posted. A Facebook spokeswoman said that the ability to edit status updates or comments made through third-party Facebook commenting systems, such as the one on mercurynews.com, could be considered in the future as well.
Facebook also continued trying to sate critics who focus on privacy, signing on to an agreement with California Attorney General Kamala Harris that will eventually require privacy policies from any developers who provide applications to Facebook's App Center. Facebook joins other Silicon Valley tech giants such as Google, Apple (AAPL), Hewlett-Packard (HPQ) and others in signing the deal, which follows the announcement of its App Center earlier this month.
With this week's gains, Facebook closed nearly 30 percent higher than the all-time low it hit in an intraday trade earlier this month; however, the company's share price is still 13 percent lower than the $38 commanded in the company's IPO last month.
Tech, bank stocks lead Wall Street to Friday rebound
Other tech stocks also gained Friday, helping to bring Wall Street back from the massive fall incurred Thursday, after negative economic reports out of China and the United States. The tech-heavy Nasdaq led the three major U.S. indexes with a gain of 1.2 percent Friday, while the Dow Jones grew by 0.5 percent and the Standard & Poor's 500 increased 0.7 percent.
The surprising gainers Friday on Wall Street were bank stocks, which did not suffer from Thursday afternoon's news that credit-rating agency Moody's had downgraded 15 financial institutions. Analysts said the downgrade was expected, and actually didn't go as far as expected, leading to bank stocks having the best day out of the S&P 500's 24 sectors.
"The bad news is out and it was not as bad as expected," Jeffrey Saut, chief investment strategist at Raymond James & Associates, told Bloomberg News. "They had been telegraphing the bank downgrades for a long time. Why does anybody pay any attention to those rating companies? They missed it during the financial crisis."
Other social-networking stocks followed Facebook higher, as Zynga closed just shy of $6 with a gain of 4.8 percent, LinkedIn rose 4.6 percent and Yelp increased 3.1 percent. eBay (EBAY) and Microsoft returned to their winning ways after a day of losses Thursday, with the stocks moving up 2.3 percent and 1.9 percent, respectively.
Tesla finishes off big week with debut of Model S
Tesla also rebounded from its first loss in a while with a strong gain on Friday, adding 5 percent as it prepared to hand out the keys to the first Model S sedans to reach the general public.
The Palo Alto electric car maker began distributing its important new product at Friday afternoon, with Gov. Jerry Brown and other heavyweights in attendance. Tesla's stock gained 12.9 percent on the week as anticipation for CEO and cofounder Elon Musk's newest offering built, and Friday's increase regained exactly the loss of Thursday to match the highest share price since May 1 at $33.78.
"There were a lot of people who said this day would never come," Musk said at the event. "But at Tesla we don't even think about them."
For live coverage from the Tesla event, click here.
Silicon Valley tech stocks
The tech-heavy Nasdaq composite index: Up 33.33, or 1.17 percent, to 2,892.42
The blue chip Dow Jones industrial average: Up 67.21, or 0.53 percent, to 12,640.78
And the widely watched Standard & Poor's 500 index: Up 9.51, or 0.72 percent, to 1,335.02
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.