Facebook’s Belated Investor Honeymoon

After slipping on a 79 percent drop in profit, Facebook Inc. regained most of the lost ground and ended the day down less than one percent from yesterday’s close. It’s a very different scenario from the days following Facebook’s initial public offering. Then, any hint of bad news sent the stock down. Now the momentum seems to have shifted in Facebook’s favor. If the market has animal spirits, they are nuzzling up to Mark Zuckerberg.

In a post last week, The Market Now covered how forgiving the market has been of Amazon.com Inc. for many years. Facebook seems to be taking pages out of Jeff Bezos’s playbook, directing attention to the good (rising mobile revenue) and justifying the bad (falling net income) as an investment in the future.

The difference is that at this stage in the history of technology, it’s hard to see maintaining the land-grab justification for very long. Facebook can’t really say it’s spending to acquire users — it has more than a billion. The company obviously still has plenty of room to make inroads in mobile. The hard part for Facebook has been making money off all the users it does have. It’s not clear that’ll be easier on a four-inch screen.

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