Facebook shares soar on mobile ad gains

Facebook Inc persuaded investors it can perform great on smartphones and tablets on Wednesday, reporting a much better-than-anticipated surge in mobile advertising revenue in the second quarter that ignited a nearly 17% share rally.

The worlds largest social network also reported an increase in daily visitors to its service, ignoring warnings that a new acquisitions of fast-growing mobile upstarts like WhatsApp and Snapchat could cut into the time consumers spend on Facebook.

According to Wall Street, second quarter net income rose 65% to $488 million compared with the same quarter last year on revenues up 53% to $1.81 billion, ahead of analysts’ expectations of $1.62 billion. Earnings per share of 19 cents exceeded expectations of 14 cents per share.

Sheryl Sandberg, chief operating officer of Facebook, said ad spending increased across all categories. E-commerce companies, in particular, doubled spending, and the number of local businesses advertising on the site globally also doubled to 1 million. “We believe this rapid growth is driven by our unique ability to target ads,” she said. “We have one of, if not the, most effective mobile ad products.”

Mobile ad sales accounted for 41% of Facebooks total ad revenue. In comparison, last quarter, that share was just 30%.

Mark Zuckerberg, the 29-year old chief executive said the company was beginning to see the benefit of investments to fix certain products over the past 18 months, particularly the mobile version of its service. “Coming into this year we could tell internally that we were turning a corner on that, that we were in good shape and could start to play a bit more offense,” Zuckerberg said in a conference call with analysts on Wednesday.

Facebook observed an increase of its monthly active users to 1.15 billion, up 21% year-over-year. Executives are expecting Facebook to continue to grow in both number of users and revenue.

Facebook earned $333 million in net income in the quarter compared with a net loss of $157 million in the same quarter a year ago.

The shares traded at $31.80 in the half-hour of after-market trading after the results were released, close to their highest level since the shares were offered at $38 apiece in May 2012’s initial public offering.