Facebook seen reporting faster revenue growth on mobile ads

Investment Needed

The company also is investing in new products. Earlier this month, Facebook unveiled “Graph Search,” which is designed to make it easier for users to find friends, restaurants, locations and interests based on their social connections. The company also unveiled new applications for Apple Inc.’s iPhone and devices running Google Inc.’s Android software last year. The investments should help maintain user interest on the service and push back against rival social services such as Twitter Inc. and Pinterest Inc.

“They do have to continue to invest pretty heavily in the business,” said Martin Pyykkonen, an analyst at Wedge Partners Corp.

Revenue should improve in 2013 as the investments pay off, according to Aaron Kessler, an analyst at Raymond James & Associates. He raised his rating to outperform from market perform and boosted sales estimates earlier this week to $6.77 billion this year, from $6.7 billion.

“Given the early positive feedback and traction from Mobile and News Feed as well as the Facebook Exchange, we believe Facebook is poised for strong ad revenue growth,” Kessler said in the research note.

Bloomberg News

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