MENLO PARK -- It took more than 14 months, but Facebook stock on Tuesday climbed to within four cents of the price at which it was first offered for public trading last year, before its precipitous plunge last summer.
Facebook shares closed on Tuesday at $37.63 after climbing as high as $37.96. That was the closest it's been to the stock's $38 debut price since its market debut on May 18, 2012, which was followed by a steep drop last summer that wiped out billions of dollars in shareholder equity.
The company's much-hyped initial public offering set a record by valuing Facebook at a whopping $104 billion, more than any other U.S. company's IPO value in history. But the hype soon fizzled as investors sold on warnings that Facebook had missed a crucial shift in consumer habits.
Facebook had acknowledged in a little-noticed public filing last spring that it had no way of selling advertising for the smaller screens of smartphones and tablets, even though many people were using those gadgets instead of desktop computers. CEO Mark Zuckerberg later vowed to remake Facebook as a "mobile first" company, by redesigning the service for iPhone and Android smartphones and creating new ad formats for mobile screens.
By last week, Zuckerberg was able to report that mobile advertising contributed 41 percent of the company's $1.6 billion in ad sales for the second quarter. The news broke just one week after investors heard from Google (GOOG) -- Facebook's much bigger rival in the online ad business -- that its mobile ad business was still struggling.
Facebook shares, which began climbing this summer, spiked sharply last week and rose more than 40 percent since last Wednesday's earnings report.
"This was an inflection point quarter," said Mark Mahaney of RBC Capital Markets, one of several investment analysts who revised their estimates in recent days and projected that Facebook could rise above $38 this year.
Wall Street bears still caution that the social network remains vulnerable to changing consumer habits, especially among fickle teens, while bulls say it hasn't yet tapped all of its potential revenue sources.
Facebook announced Tuesday that it will partner with mobile game developers to promote their apps in exchange for a share of their income. Bloomberg News, meanwhile, reported Tuesday that Facebook is close to making its widely anticipated move into video advertising later this year.
"Facebook still has many growth levers left to pull," Mahaney wrote in a report to investors.
Contact Brandon Bailey at 408-920-5022; follow him at Twitter.com/BrandonBailey