Facebook's stock surged more than 7 percent on Wednesday, a day after CEO Mark Zuckerberg offered investors some upbeat assurances that his company is committed to building revenue from mobile advertising.
Zuckerberg's comments helped increase Facebook's market value by more than $4 billion in just one day. His participation in an on-stage interview at a tech industry conference on Tuesday made headlines because it marked his first public appearance since the company's controversial Wall Street debut last May and a single telephone conference call with analysts over the summer.
"It was good to see Zuckerberg publicly present, and we think it is critical for investors to hear more directly from him," Macquarie Securities analyst Ben Schachter wrote in a note after the speech.
Facebook's stock had plunged sharply since the May 18 initial public offering. It fell below $18 last week, which is less than half the $38 price at which the stock debuted. But shares rose slightly on Tuesday, amid anticipation over Zuckerberg's appearance at the TechCrunch conference in San Francisco. The stock gained another $1.48 on Wednesday, closing at $20.91.
Although he offered few details to quantify the financial impact, Zuckerberg said Tuesday that early results from Facebook's efforts to sell mobile advertising have been promising.
Those remarks suggest Facebook "is likely farther along in monetizing mobile ads than they've indicated and investors have thought so far," said investment analyst Martin Pyykkonen of Wedge Partners, in a note to clients.
Zuckerberg also raised the possibility of Facebook developing its own search business, after noting that Facebook could help its users find information about businesses and services, including recommendations from other users.
That would increase Facebook's competition with Google (GOOG). But Colin Sebastian of Baird Equity Research said he expects Facebook to focus on helping users search for information on Facebook, rather than try to index everything on the Internet.
Several analysts also noted that Zuckerberg did not back away from the company's previous statements that it expects to increase spending as a percentage of revenue over the next few quarters, which means profit will grow more slowly.
"Facebook remains focused on longer-term platform building rather than short-term financial performance," Sebastian wrote in a note to clients.
Contact Brandon Bailey at 408-920-5022; follow him at twitter.com/BrandonBailey