Wall Street Watch Thursday: Is This the Start of a Facebook Rally?

Mark Zuckerberg
Mark Zuckerberg

Shares of Facebook (FB) closed nearly 8% higher on Wednesday.

This may not seem like a newsworthy pop, but it's actually the social networking website operator's biggest single-day percentage gain since going public four months ago.

Yes, it's been that hard on Facebook. Short of the occasional baby steps higher and a 6% uptick one day in June it's been largely downhill for the company that went public with plenty of buzz in May at $38.

In retrospect, Facebook probably had no reason to be valued as a $104 billion company at the time. Yes, there are 955 million active users on the site, but it's not as if social media is something that is easily monetized.

Facebook is profitable and growing, but even now it's still priced at a rather lofty 43 times this year's projected profitability and 33 times next year's bottom-line target.

Can Facebook's rally continue on Thursday? It's certainly possible. The stock rallied on Wednesday after CEO Mark Zuckerberg gave a positive interview during the TechCrunch Disrupt conference. The young helmsman conceded that seeing his stock shed roughly half of its value since the IPO has challenged company morale. However, he also pointed out how the company continues to make headway in both mobile monetization and in social innovation.

Investors may be encouraged by both his polished rhetoric and Wednesday's refreshing pop, but Facebook will have to earn its way back up if the rally is to continue.

Other Things Worth Watching

• It may be quiet on the earnings front this time of year, but there are plenty of companies looking to raise some money during the summertime lull. Chesapeake Lodging Trust (CHSP), Genesee & Wyoming (GWR), inContact (SAAS), and Pluristem Therapeutics (PSTI) all announced plans for secondary offerings after Wednesday's market close. Investors generally don't like the dilutive nature of secondary stock offerings, but having more money on hand is usually a good thing.

• Google (GOOG) remains on top of the country's search market, but it may be losing ground. Traffic tracker comScore published it latest online metrics on Wednesday afternoon. The data shows Google with a whopping 66.4% of the market last month, but that's actually down from a thicker 66.8% slice in July. It's still the undisputed champ with roughly two thirds of the market, but investors may want to see how that trend plays out in the coming months.

Longtime Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Facebook. Motley Fool newsletter services have recommended buying shares of Google, Facebook, and Genesee & Wyoming.

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