On Wednesday, Facebook Inc. posted impressive growth in the mobile advertising business. However, investors had been rattled after Facebook announced plans of keeping the current frequency of ads in user newsfeed.
The online social network's shares had increased by 15%, USD49.10, before dropping to 3% at USD47.40. Facebook's stock settled at USD49.16. Back in July, one ad per twenty stories appeared in the newsfeed. There will be no increase in ads shown from this point forward as stated by Chief Financial Officer, David Ebersman.
Ebersman's remarks along with studies suggesting younger teens dropping off Facebook due to the number of ads had soured investors' mood. Just when Facebook had a 60% rise in revenue in the mobile ad business.
BTIG analyst, Richard Greenfield stated, "There seems to be concern about the ad load not going up."
However, Greenfield believed that increasing prices for ads rather than the volume would pose better growth for Facebook.
In the third quarter, USD880 million or 49% of Facebook's revenue came from mobile ads. Also in the past three months, Facebook shares have doubled. According to Thomson Reuters, the total revenue of Facebook in the third quarter has reached USD2.016 billion which is ahead the expectation of analysts of USD1.911 billion.
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