2012 was a hugely difficult year for Facebook: Its stock price more than halved after a botched IPO, and questions were being asked about whether it could make money as its users increasingly moved over to mobile. But its resurgence in 2013 has been equally remarkable. The company’s share price closed at fresh highs on Dec. 23, and has more than doubled in 2013, easily outpacing the broader market, which rose by about 28%. Its mobile usage and its advertising business are booming, and thanks to a cleverly timed $3.9 billion secondary offering, its already bulging coffers are overflowing with cash as never before.
The main reason for the revival has been Facebook’s surprisingly fast progress in growing, and making money from, its mobile user base. The number of monthly mobile active users (MAUs) has risen by nearly 50% in little more than a year:
And while mobile advertising revenue was negligible at the time of the IPO, it now accounts for just under half of the company’s entire ad revenue.
There are plenty of risks to Facebook’s continued growth. Analysts fret that the company is becoming unpopular with teens, the service has a questionable track record on privacy, and new features, such as video advertising in news feeds, could annoy users, causing them to defect. The jury is also still out on whether or not its purchase of photo-sharing site Instagram a month before the IPO was a smart move, since Instagram has many larger competitors.
But the company has a pretty good hedge for all of these risks. Its recent capital-raising means it now has more cash than it ever had—almost $11 billion to play with.
That’s more than enough to iron out any issues with its design or infrastrucure. And despite talk of frothy valuations in Silicon Valley, it’s also more than enough to spend on yet another fast-growing, youth-oriented photo-sharing app—if it can only persuade it to sell.