SAN FRANCISCO -- Will Facebook wow investors with mobile again?
That's the question as the giant social network prepares to report third-quarter earnings after the closing bell Wednesday.
The company excised some of the concerns that dogged its initial public offering by reporting a surge in advertising revenue from users on smartphones and tablets in the second quarter. Mobile ad revenue jumped 76% to $656 million from the previous quarter.
Mobile advertising is the key metric for all Internet companies as consumers gravitate to smartphones and tablets and away from desktop computers.
Mobile users make up 819 million of Facebook's nearly 1.2 billion monthly users. And mobile made up 41% of all advertising revenue in the second quarter, up from 30% in the first quarter.
Investors will also be listening closely for details on ads on mobile photo-sharing service Instagram. Instagram has just begun to experiment with ads on the service. Also, Facebook still has not rolled out video ads, which analysts see as a major opportunity because it targets television ad budgets. Facebook has been experimenting with videos that automatically start running in the News Feed.
Facebook is on a roll. Last week it reached a high of $54.83. The stock was trading up slightly to $49.53 on Wednesday.
Analysts expect Facebook to report earnings of 19 cents a share on revenue of $1.91 billion. A year ago, Facebook had a loss of $59 million, or 2 cents a share. Excluding certain items, it earned $311 million, or 12 cents a share. Revenue ticked up 32% to $1.26 billion from $954 million.
"We expect strong third-quarter results," J.P. Morgan analyst Doug Anmuth said in a research report.
Anmuth said he also sees "upside potential" in the fourth quarter.
Notably, Anmuth says Facebook is broadening its advertiser base.
"We believe Facebook expanded its breadth of advertiser base with a notable pick-up in entertainment industry ads across TV shows, movies and console game launches," he said.
Anmuth also sees an increase in retargeted ads, which let advertisers reach users based on their browsing history elsewhere on the Web.