Facebook (FB) Stock Woes: FB Stock Makes Friday Rally


Facebook (FB) is building up on the good momentum experienced by the young public company during the last two weeks, when the social network’s stock climbed over 20% amid announcements of new advertising vehicles and the blessing of investors who seem to have gotten over a disastrous debut.

But now, even the bad press that surrounded Facebook’s initial public offering – and that stopped short of declaring the advent of tech bubble 2.0 as well as the collapse of the entire Silicon Valley – seems to have shifted towards a more optimistic outlook and a friendlier territory.

Facebook shares rose over 20% percent in the past two weeks, after plunging to $25.52 on June 6. The stock closed Thursday at $31.84, still far below the initial price of $38 but finally trending in the right direction. The much needed recovery has been attributed to moves from the company which has announced several plans to increase its revenue from mobile advertising as well as a couple of big advertisement endorsements – Ford and Coca Cola – which claim Facebook’s advertisement tools work for them. 

However, controversy never really abandons the Palo Alto, California, company which has faced its share of privacy concerns from users in the past. Court documents filed this week, show Facebook has agreed to tweak some of its practices to settle a privacy lawsuit over one type of advertising that Facebook calls "sponsored stories." In addition, the social network has faced backlash over its plan of officially allowing users below the age of 13 to use its service; the social network has also faced fresh privacy concerns with the acquisition of Face.com – a face recognition software company which will allow Facebook users to tag people in pictures even under poor lighting conditions.

There is no denying the merits of a company that started as recent as 2004 in the Harvard college dorms of Mark Zuckerberg, Eduardo Saverin, Dustin Moskovitz and Chris Hughes; but as the famous social network grows into one of Silicon Valley's titans, analysts warn caution regarding its business model. “It’s still unclear how the company will make money from the increasing number of users who are accessing the service on smartphones and tablets, rather than personal computers,” warned Argus Research’s Joseph Bonner.