Forget the Botched IPO: Facebook Inc. (FB) Is Back

Facebook Inc. (NASDAQ:FB) is back on track as it has finally began to dust off the effects of its botched IPO, among other business challenges. Facebook lost more than 50 percent in market value within four months of going public, after it slumped from its May 18, 2012 offer price of $38 per share to trade at $17.55 in September.

The social networking giant also reported a loss in two consecutive quarters as it struggled to make the numbers count in Ad revenue and Mobile monetization.  The company also invested heavily during 2012, acquiring several startups, including Instagram and Face.com. Moreover, Facebook Inc. (NASDAQ:FB) introduces a number of features and strategies towards its ad monetization campaign.

Notably, Facebook introduced sponsored stories, which are already paying dividends, as well as promoted posts, Facebook Inc. (NASDAQ:FB) Gift Service, and Facebook Ad Exchange. Other additions to the social media giant include the Facebook Jobs App, which seeks to challenge Linkedin Corporation (NYSE:LNKD) on the professional networking platform, and Search, in partnership with Bing.com, which is perceived as a genuine future competitor to Google Inc (NASDAQ:GOOG) .

Back To Profitability

Facebook Inc. (NASDAQ:FB) is back to profitability having reported a non-GAAP EPS of $0.17 per share, beating a consensus estimate of $0.15 for the December quarter. The company reported revenue of $1.59 billion, compared to analyst estimates of $1.51 billion, and non-GAAP EBITDA of $960 million versus consensus estimates of $855 million, representing a 32 percent year-over-year growth rate. The company’s overall revenue during the quarter increased by 40 percent year-over-year, and 26 percent sequentially.

Facebook Inc. (NASDAQ:FB)’s Challenge on Search and Jobs App

The biggest challenge to Facebook Inc. (NASDAQ:FB) is to maintain the trend. This will be very difficult given the fact that some of its business units face stiff competition from market leaders. Also, Arvind Bhatia, an analyst at Sterne Agee, believes that Facebook’s EBITDA is due to succumb to pressure as the company increases investment in R&D. The company is indeed venturing into new areas of business, including Search, well dominated by Google, and Professional networking business, which LinkedIn’s main income generator. It will need to invest highly in R&D for it to stand any chance of making an impact.

In a recent note to investors, Arvind Bhatia wrote,

Strong 4Q mobile performance should strengthen belief in the long-term story, though some “whisper” expectations were unreasonably high. Importantly, desktop ad revenue was up as well. New products: Facebook Exchange (FBX), Custom Audiences, Offers and mobile app installs, etc. seem very promising and should continue to drive strong top-line growth. FB plans to step up spending to capture these and many other opportunities (FB Gifts, etc.) ahead.